Cocoa Rallies as Softer Dollar Offsets Supply Pressures

July ICE New York cocoa (CCN26) rose 107 points, or 2.83%, while July ICE London cocoa #7 (CAN26) gained 68 points, or 2.35%.

Cocoa prices climbed to their highest levels in about 1.5 weeks as weakness in the U.S. dollar supported the broader commodity complex. The dollar index ($DXY) fell to a one-week low, improving demand for dollar-denominated commodities.

Cocoa prices had fallen to three-week lows last week after signs of ample supply weighed on the market. Last Thursday, the Ivory Coast raised its estimate of cocoa deliveries to ports by more than 260,000 MT for the season so far. Cumulative Ivory Coast port data show farmers shipped 1.95 MMT of cocoa during the current marketing year, from October 1, 2025, through June 7, 2026, up 18.9% from the same period a year earlier. The Ivory Coast recently projected 2025/26 cocoa production would decline 10.8% year over year to 1.65 MMT, down from 1.85 MMT in 2024/25.

Rising inventories remain a bearish factor for cocoa prices. ICE cocoa inventories increased to a 1.75-year high of 2,929,074 bags on June 5 and were slightly lower at 2,917,793 bags on Friday.

Medium-term support for cocoa prices comes from weather-related risks. Japan’s Meteorological Agency confirmed last Wednesday that an El Niño pattern had formed across the equatorial Pacific. El Niño conditions could bring warmer and drier weather to West Africa, potentially harming cocoa production. The U.S. National Oceanic and Atmospheric Administration (NOAA) estimates a 67% chance of a “Super El Niño” this year, which could be one of the strongest on record.

Early surveys of the 2026/27 West African cocoa crop also point to potential supply constraints. The surveys show below-average cherelle formation on cocoa trees, suggesting a weaker outlook for the main harvest, which begins in October.

The prolonged closure of the Strait of Hormuz is also supporting cocoa prices by disrupting global supply chains. The closure has reduced fertilizer availability and increased shipping rates, insurance costs, and fuel prices, raising costs for cocoa importers.

Weak global cocoa demand remains a headwind. The National Confectioners Association reported on April 23 that North American Q1 cocoa grindings fell 3.8% year over year to 106,087 MT. The European Cocoa Association reported that Q1 European cocoa grindings declined 7.8% year over year to 325,895 MT, a steeper drop than the expected 6% decline and the lowest Q1 level in 17 years. In contrast, the Cocoa Association of Asia reported that Q1 Asian cocoa grindings unexpectedly rose 5.2% year over year to 223,503 MT, stronger than expectations for a 6.7% decline.

Reduced cocoa supplies from Nigeria, the world’s fifth-largest cocoa producer, are also supportive. Bloomberg reported on May 28 that Nigerian cocoa exports in April fell 20% year over year to 14,921 MT. Nigeria’s Cocoa Association projects 2025/26 cocoa production will decline 11% year over year to 305,000 MT, down from a projected 344,000 MT in the 2024/25 crop year.

In February, Ghana cut the official price paid to cocoa farmers by nearly 30% for supplies tied to the 2025/26 growing season. In March, the Ivory Coast said it would reduce farmer payments by 57%, effective for the mid-crop harvest that began in March. Together, the Ivory Coast and Ghana account for more than half of global cocoa production.

The outlook for a smaller global cocoa surplus is also supporting prices. On April 29, StoneX reduced its 2026/27 global cocoa surplus estimate to 149,000 MT from a January forecast of 267,000 MT, citing risks to the West African crop from an expected El Niño weather event. StoneX also lowered its 2025/26 global cocoa surplus forecast to 247,000 MT from a January estimate of 287,000 MT.

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