Cocoa Prices Surge on West African Flood Risks and El Niño Threats

September ICE New York cocoa futures (CCU26) settled up $65 (+1.14%) on Tuesday, while September ICE London cocoa #7 (CAU26) gained $43 (+1.02%), extending a sharp three-week rally to six-month highs.

The advance is driven by torrential rains across Ivory Coast and Ghana, which have inundated farm access roads and disrupted port logistics, threatening near-term global supplies. Excessive moisture also heightens the risk of brown rot and black pod disease, potentially reducing yields and jeopardizing the upcoming harvest.

Medium-term support stems from evolving weather patterns. On June 10, Japan’s Meteorological Agency confirmed the formation of an El Niño across the equatorial Pacific. The phenomenon typically brings warmer, drier conditions to West Africa, stressing cocoa trees and lowering output potential. The U.S. National Oceanic and Atmospheric Administration (NOAA) projects a 67% probability of a “Super El Niño” developing this year, potentially one of the strongest on record.

Early surveys for the 2026/27 Ivory Coast main crop, which begins in September, indicate below-average cherelle formation, signaling a weak outlook. Preliminary assessments point to poor pod development and an average production estimate of 1.8 million metric tons (MMT) for the new season, down 18% from approximately 2.2 MMT in 2025/26. Markets await updated surveys in July for a clearer picture of final crop size.

Rising inventories provided a partial offset. ICE-monitored cocoa stocks climbed to a near two-year high of 3,082,154 bags on Tuesday.

Prices faced pressure last month amid signs of ample current supply. On June 11, Ivory Coast raised its estimate of cocoa arrivals at ports by over 260,000 metric tons for the current season. Cumulative data show farmers delivered 2.04 MMT to ports in the 2025/26 marketing year (October 1, 2025–June 28, 2026), up 20% year-over-year. However, Ivory Coast projects total 2025/26 production will fall 10.8% to 1.65 MMT from 1.85 MMT in 2024/25.

Additional supply signals emerged from Nigeria, the world’s fifth-largest producer, where May exports surged 28% year-over-year to 18,034 metric tons, according to Bloomberg data on June 25.

Demand indicators remain mixed. North American first-quarter grindings fell 3.8% year-over-year to 106,087 metric tons, per the National Confectioners Association. European grindings dropped 7.8% to 325,895 metric tons, exceeding the expected 6% decline and marking a 17-year low for a first quarter. Conversely, Asian grindings unexpectedly rose 5.2% to 223,503 metric tons, defying forecasts for a 6.7% decline.

Nigeria’s Cocoa Association projects 2025/26 production will decline 11% to 305,000 metric tons from 344,000 metric tons in 2024/25, offering underlying price support.

Producer price adjustments in the top two growing nations add complexity. In February, Ghana cut the official farmgate price for the 2025/26 season by nearly 30%. In March, Ivory Coast announced a 57% reduction effective for the mid-crop harvest. Together, the two nations account for over half of global cocoa output.

The global surplus outlook continues to narrow. On April 29, StoneX reduced its 2026/27 global cocoa surplus forecast to 149,000 metric tons from a January estimate of 267,000 metric tons, citing El Niño risks to the West African crop. The 2025/26 surplus projection was also lowered to 247,000 metric tons from 287,000 metric tons.

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