Ivory Coast Drought Drives Cocoa Price Surges

December ICE NY cocoa (CCZ26) closed up +62 (+1.12%) on Thursday, and December ICE London cocoa #7 (CAZ26) closed up +55 (+1.33%).

Cocoa prices rose on Thursday for a third straight session, reflecting dry conditions across West Africa. Forecasts of below‑normal rainfall in the Ivory Coast for the coming week suggest potential crop stress and a reduction in output for the 2026/27 season. The stronger move in London cocoa followed the British pound slumping to a two‑month‑low against the U.S. dollar, raising prices on cocoa denominated in sterling.

Cocoa prices have faced mounting pressure over the past three weeks, dipping to a 1.75‑month low on Tuesday amid indications of higher output in the Ivory Coast. On September 2, the Ivory Coast’s cocoa regulator, Le Conseil du Café Cacao, reported a 30 % rise, noting a harvest of 2.06 MMT from June 2025 to June 2026—up sharply from the prior year’s 1.58 MMT.

Earlier this week, Bloomberg highlighted that cumulative shipments from the Ivory Coast exceeded 2.14 MMT for the current international marketing year (Oct 1 2025 – Sep 13 2026), an 18 % increase year‑over‑year. However, Reuters’ data using the September‑started Ivory Coast marketing year showed delivery volumes for Sep 1‑13 falling 45.8 % compared with the same period of the prior season (Oct 1‑Dec 12). Rising inventories continue to weigh on pricing, with ICE cocoa stocks reaching a 2.25‑year high of 3,437,710 bags.

On September 2, Barry Callebaut AG, the world’s largest cocoa processor, cautioned that the global market is now relatively well‑supplied, better positioning it to manage risk than after the extreme 2023/24 El Niño events that spurred record‑high prices.

The recent price climbs were underscored when New York cocoa set a 11.75‑month high on August 31 and London cocoa reached an emblematic high on September 1. Underlying support also stems from preliminary 2026/27 crop assessments indicating suboptimal conditions: black‑pod disease spreads faster under cloudless weather, lowering bean quality. Early crop guidance shows diminished cherelle emergence on cocoa trees and poor pod development, projecting only 1.8 MMT for the 2026/27 season—down 18 % from roughly 2.2 MMT in 2025/26.

Further upward pressure comes from concerns over a tighter harvest in Ghana, the second‑largest producer. The Ghana Cocoa Board’s August 20 survey estimated the 2026/27 Ghana crop at 650,000 MT, a 13 % decline from the 750,000 MT seen in 2025/26.

Industry analysts corroborate the modest uplift. StoneX cut its 2026/27 global cocoa surplus estimate to 25,000 MT from earlier forecasts near 149,000 MT, while Transgraph Consulting revised the projected surplus for the year ahead to 80,000 metric tons, primarily because production is expected to rise to 4.87 MMT in 2026/27—down from 5.11 MMT in 2025/26.

“Projected Ghana production could fall to 450,000–550,000 MT in 2026/27, largely due to swollen shoot disease, aging farms, and the threat of El Niño,” forecasted Ghana’s regulator, COCOBOD, on July 30. Meanwhile, Ghana’s cocoa board confirmed that 750,000 MT had already been harvested for the 2025/26 season, up 25.6 % from last year’s figures.

Looking ahead, climate models paint a grim picture. The U.S. Climate Prediction Center warns that the recent El Niño surge is among the strongest patterns in over 75 years, typically bringing warmer, drier conditions to West Africa—drier soils, stressed trees, and lower yields.
^{Source: U.S. Climate Prediction Center, July 8}

Demand signals remained mixed. European Q2 grinding slipped −4.6 % to 316,366 MT, a sharper decline than the−1.5 % expected, marking the lowest Q2 grind rate in six years. Conversely, North American processing jumped +7.7 % year‑on‑year to 109,659 MT. Asian markets rebounded strongly, lifting Q2 activity by +25 % to 224,646 MT, surpassing growth expectations.

On the date of publication, Rich Asplund did not hold positions in any of the securities discussed, and all information in this article is for informational purposes only.

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