Cocoa Futures Tumble as European Grind Data Signals Demand Weakness

September ICE New York cocoa (CCU26) settled down $521 (-8.86%), while September ICE London cocoa #7 (CAU26) declined £385 (-8.82%) on Thursday, dragging both contracts to 1.5-week lows.

The selloff accelerated after the European Cocoa Association reported second-quarter grindings dropped 4.6% year-over-year to 316,366 metric tons, significantly worse than the anticipated 1.5% decline and marking the lowest Q2 level in six years. The bearish European data overshadowed a surprisingly strong Asian demand report, where the Cocoa Association of Asia showed Q2 grindings surged 25% to 224,646 metric tons, well above the 9% growth forecast.

Supply-side indicators added further pressure. Bloomberg reported Nigerian June cocoa exports jumped 30% year-over-year to 18,922 metric tons, reinforcing expectations of ample near-term availability.

The decline marks a sharp reversal from last week’s multi-month highs — New York cocoa reached a 6.25-month peak and London cocoa a 9.5-month peak — driven by heavy rains across Ivory Coast and Ghana that flooded transport routes, isolated farmers from fields and ports, and raised the risk of brown rot and black pod diseases.

Demand recovery signals had provided recent support. Barry Callebaut AG, the world’s largest cocoa processor, reported fiscal third-quarter sales rose 5.7% last Thursday, the first increase in over two years.

Medium-term fundamentals remain anchored by weather concerns. The U.S. Climate Prediction Center indicated last Wednesday that the El Niño pattern emerging in the equatorial Pacific could rank among the strongest in 75 years, typically bringing hotter, drier conditions to West Africa that stress cocoa trees and suppress yields.

Rising inventories weigh on the near-term outlook. ICE-monitored cocoa stocks climbed to a two-year high of 3,204,512 bags on Tuesday. Meanwhile, Ivory Coast port arrivals for the current marketing year (October 1, 2025 through July 12, 2026) totaled 2.09 million metric tons, up 21% from the same period a year earlier.

Early surveys for the 2026/27 Ivory Coast main crop, which begins in September, show below-average cherelle formation and poor pod development, pointing to a projected harvest of 1.8 million metric tons — an 18% decline from the 2.2 million metric tons estimated for 2025/26. Markets await updated surveys this month for further clarity.

Supply estimates have been volatile. On June 11, Ivory Coast raised its season-to-date port arrivals figure by over 260,000 metric tons, while projecting 2025/26 production at 1.65 million metric tons, down 10.8% year-over-year. Nigeria, the world’s fifth-largest producer, sees output falling 11% to 305,000 metric tons in 2025/26 from 344,000 metric tons the prior year.

Producer-price cuts in the top two growing nations underscore the supply-demand tension. Ghana reduced its farmgate price nearly 30% for the 2025/26 season in February, and Ivory Coast followed with a 57% cut effective for the March mid-crop harvest. Together, the two nations account for over half of global output.

The global surplus outlook has narrowed. On April 29, StoneX trimmed its 2026/27 surplus forecast to 149,000 metric tons from 267,000 metric tons in January, citing El Niño risks to the West African crop. The 2025/26 surplus estimate was also reduced to 247,000 metric tons from 287,000 metric tons.

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