On Wednesday, cocoa prices retreated as July ICE NY cocoa (CCN26) fell by 36 points (-0.88%) and July ICE London cocoa #7 (CAN26) dropped 44 points (-1.41%). The decline was primarily driven by concerns regarding chocolate demand, following updated guidance from Barry Callebaut—the world’s seventh-largest chocolate manufacturer—which suggested a more gradual recovery in sales volumes than previously anticipated. Additionally, rising inventories weighed on the market, with ICE cocoa stocks climbing to a 1.75-year high of 2,913,278 bags.
Despite these headwinds, cocoa losses were mitigated by escalating weather risks. The potential development of an El Niño pattern threatens to bring warmer, drier weather to West Africa, which could jeopardize regional production. The US National Oceanic and Atmospheric Administration (NOAA) has estimated an 82% probability of El Niño conditions emerging by July and persisting through year-end, with a 67% chance of a “Super El Niño” event.
Market sentiment is also being buoyed by early surveys of the 2026/27 West African crop. These reports indicate below-average cherelle formation on cocoa trees, suggesting a potentially weak outlook for the main harvest starting in October.
Conversely, increased shipments from the Ivory Coast have exerted bearish pressure. Cumulative data shows that Ivorian farmers shipped 1.66 MMT of cocoa to ports during the current marketing year (October 1, 2025, to May 31, 2026), a 1.8% increase year-over-year. Furthermore, the Ivory Coast raised its 2025/26 cocoa delivery estimate to 2.2 MMT from the previous 1.8-1.9 MMT range, citing favorable weather conditions.
While some signals suggest consumer demand is resilient—notably stronger-than-expected earnings from Hershey and Mondelez International—other data points to weakness. Circana reported that North American chocolate candy sales fell 1.3% in the 13 weeks ending March 22 compared to the previous year.
Shifting surplus projections are also influencing prices. StoneX recently lowered its 2026/27 global cocoa surplus estimate to 149,000 MT from a January forecast of 267,000 MT, citing El Niño risks. The firm also reduced its 2025/26 surplus forecast to 247,000 MT from 287,000 MT.
Geopolitical tensions, specifically the prolonged closure of the Strait of Hormuz, are creating supply chain disruptions that support prices. The closure has increased costs for importers by driving up shipping rates, insurance premiums, and fuel prices, while simultaneously limiting fertilizer supplies.
Global demand trends remain mixed. The National Confectioners Association noted that North American Q1 cocoa grindings fell 3.8% year-over-year to 106,087 MT. Similarly, the European Cocoa Association reported that Q1 European grindings dropped 7.8% year-over-year to 325,895 MT—the lowest Q1 level in 17 years. In contrast, the Cocoa Association of Asia reported an unexpected 5.2% year-over-year increase in Q1 grindings to 223,503 MT.
Supply constraints in Nigeria, the world’s fifth-largest producer, are providing support. Bloomberg reported that Nigerian cocoa exports fell 20% year-over-year in April to 14,921 MT. The Cocoa Association of Nigeria expects 2025/26 production to decline by 11% to 305,000 MT, compared to the 344,000 MT projected for the 2024/25 season.
Drought concerns persist in West Africa as recent rainfall has failed to alleviate dry conditions. According to the African Flood and Drought Monitor, drought conditions currently affect more than half of the Ivory Coast and approximately two-thirds of Ghana.
Economic shifts in the major producing nations are also notable; Ghana reduced official cocoa farmer pay by nearly 30% for the 2025/26 season, and the Ivory Coast implemented a 57% reduction for the mid-crop harvest starting in March. Together, these two nations account for over half of global cocoa production.
On the bullish side, the Ivory Coast anticipates its 2025/26 production will drop 10.8% year-over-year to 1.65 MMT. Additionally, Rabobank lowered its 2025/26 global cocoa surplus estimate to 250,000 MT from a previous forecast of 328,000 MT.
Finally, the International Cocoa Organization (ICCO) recently reduced its global 2024/25 cocoa surplus estimate to 48,000 MT from 75,000 MT in March, marking the first surplus in four years. The ICCO estimated that global cocoa production for the 2024/25 period rose by 8.3% year-over-year to 4.723 MMT.