Cocoa Prices Fall Sharply on Abundant Global Supply, Easing Weather Premiums

December ICE NY cocoa (CCZ26) closed down -298 (-4.54%) on Wednesday, and December ICE London cocoa #7 (CAZ26) closed down -238 (-4.94%).

Cocoa prices settled sharply lower on Wednesday for a second consecutive day, driven by signs of ample global cocoa supplies. The market tumbled after Barry Callebaut AG, the world’s largest cocoa processor, stated that the global cocoa market is well-supplied, leaving the market better prepared to manage risks than it did during the 2023/24 El Niño weather event that previously drove cocoa prices to record highs.

Larger cocoa supplies from the Ivory Coast, the world’s largest cocoa producer, continued to pressure prices. Cumulative data released Tuesday showed that farmers shipped 2.14 MMT of cocoa to ports in the current marketing year (October 1, 2025, through August 30, 2026), up 19% from the same period a year ago. On Wednesday, the Ivory Coast cocoa regulator, Le Conseil du Café Cacao, reported that the country harvested 2.06 MMT of cocoa from June 2025 to June 2026, up 30% from 1.58 MMT a year earlier.

Rising cocoa inventories also weighed on prices, with ICE cocoa inventories climbing to a two-year high of 3,411,776 bags on Tuesday.

Prior to this week’s decline, cocoa prices had strengthened, with NY cocoa reaching an 11-month high on Monday and London cocoa posting an 11-month high on Tuesday. Concerns regarding the quality of this year’s West African crops provided underlying support. Cloudy weather and limited sunshine in the Ivory Coast and Ghana have facilitated the spread of black pod disease, lowering cocoa bean quality.

Concerns over a smaller cocoa crop from Ghana, the world’s second-largest cocoa producer, remain bullish for prices. On August 20, Ghana’s Cocoa Board estimated that the 2026/27 cocoa crop would reach 650,000 MT, down 13% from 750,000 MT the previous year, following a field survey of pod counts. Cocoa prices also have underlying support from early surveys of the 2026/27 Ivory Coast cocoa crop, which show below-average cherelle formation on cocoa trees, signaling a weak outlook for the main harvest. Early assessments indicated poor pod development, with an average estimate of 1.8 MMT for the season starting in September, down 18% from approximately 2.2 MMT in 2025/26.

On the bullish side, StoneX cut its 2026/27 global cocoa surplus estimate to 25,000 MT on July 29, down from a forecast of 149,000 MT in April, citing risks to the West African crop from an expected El Niño. In addition, Transgraph Consulting forecast on July 23 that the global cocoa surplus in 2026-2027 will shrink to 80,000 MT from 415,000 MT in 2025-2026, mainly due to an expected decline in production to 4.87 MMT from 5.11 MMT.

In another bullish factor, Ghana’s cocoa regulator, COCOBOD, projected on July 30 that the country’s 2026/27 cocoa production could fall to between 450,000 MT and 550,000 MT, down from the 750,000 MT projected for 2025/26, due to the combined effects of swollen shoot disease, aging cocoa farms, and the likelihood of adverse weather from the El Niño pattern. However, production remains strong for the current marketing year, as Ghana’s cocoa board reported last Wednesday that 750,000 MT of cocoa has been harvested for the 2025/26 season, up 25.6% from 597,000 MT in 2024/25.

Cocoa prices have underlying medium-term support from future weather concerns. On July 8, the US Climate Prediction Center stated that the El Niño weather pattern emerging across the equatorial Pacific is likely to be one of the strongest in more than 75 years. An El Niño typically brings warmer, drier conditions to West Africa, reducing soil moisture, stressing cocoa trees, and lowering yields.

Current cocoa supplies are adequate, representing a bearish factor for prices. On July 21, Bloomberg reported that Nigeria’s July cocoa bean exports rose 18% year-over-year to 16,052 MT. Nigeria is the world’s fifth-largest cocoa producer.

Cocoa demand was mixed in Q2. On July 16, the European Cocoa Association reported that Q2 European cocoa grindings fell 4.6% to 316,366 MT, a larger decline than the expected 1.5% year-over-year decrease and the lowest level for Q2 in six years. However, the National Confectioners Association reported that Q2 North American cocoa grindings unexpectedly rose by 7.7% year-over-year to 109,659 MT, well above expectations of a 1% decline, easing demand fears. Additionally, Asian cocoa demand improved after the Cocoa Association of Asia reported that Q2 Asian cocoa grindings rose by 25% year-over-year to 224,646 MT, well above expectations of a 9% increase.

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