Cocoa Prices Decline as Drier West Africa Weather Outlooks Offset Supply Concerns

Cocoa prices retreated on Tuesday as updated weather forecasts predicting drier conditions in West Africa offset earlier gains driven by concerns over crop damage in Ivory Coast. July ICE NY cocoa settled unchanged, while July ICE London cocoa #7 fell 0.68%.

Prices had initially risen on Monday and early Tuesday following reports that heavy rains and winds in Ivory Coast, the world’s top cocoa producer, had damaged young flower buds and trees. However, those gains were erased as forecast models shifted toward drier conditions for the region later this week.

Bearish positioning by managed money in NY cocoa could amplify downside risks. According to the latest Commitment of Traders report, speculators increased their net short positions in NY cocoa to 21,111 contracts in the week ended June 2, the highest level in more than three years.

prices pressured by rising inventories. ICE cocoa stocks reached 2,929,074 bags last Friday, the highest level since November 2023.

Medium-term downside may be limited by mounting weather concerns. The emergence of El Niño conditions—estimated at 82% probability by NOAA through July—could bring warmer, drier weather to West Africa, potentially curbing cocoa production. Additionally, early surveys indicate below-average cherelle formation on West African cocoa trees, pointing to a weaker main harvest season beginning in October.

Concerns over oversupply persist. Ivory Coast cocoa shipments reached 1.69 million metric tons in the current marketing year through June 7, up 3% year-over-year. The government recently raised its 2025/26 season estimate to 2.2 million tons from a previous range of 1.8–1.9 million tons, citing favorable weather.

Offsetting factors include steady consumer demand. Second-quarter earnings from Hershey and Mondelez International beat expectations, suggesting resilient chocolate consumption despite high prices. However, North American chocolate candy sales declined 1.3% in the 13 weeks ended March 22, per Circana data.

Recent revisions to global surplus projections signal tighter supplies. StoneX reduced its 2026/27 global cocoa surplus forecast to 149,000 metric tons from 267,000 metric tons previously. The International Cocoa Organization further trimmed its 2024/25 surplus estimate to 48,000 tons—the first surplus in four years.

Supply disruptions from the ongoing closure of the Strait of Hormuz are adding upward pressure by increasing shipping costs and reducing fertilizer availability. Meanwhile, Nigeria’s cocoa exports fell 20% year-over-year in April to 14,921 tons, and the country projects an 11% drop in 2025/26 production.

Downward pricing trends emerged in key markets: North American cocoa grindings dropped 3.8% to 106,087 tons, and European grindings fell 7.8% to 325,895 tons—the lowest first-quarter level in 17 years. Conversely, Asian cocoa grindings rose 5.2% to 223,503 tons.

In policy developments, Ghana cut its official cocoa farmer price by nearly 30% for the 2025/26 season, while Ivory Coast announced a 57% reduction for its mid-crop harvest. These moves affect more than half of the world’s cocoa output.

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