Cocoa prices experienced a significant decline on Friday, with September ICE NY cocoa closing down by 152 points or 2.90%, and July ICE London cocoa #7 dropping by 100 points or 2.56%. The recent drop in prices can be attributed to indications of larger global supplies, which triggered long liquidation in cocoa futures.
In a report by Bloomberg, it was highlighted that Nigerian cocoa exports for May increased by 28% year-on-year, reaching a total of 18,034 metric tons. Earlier this week, cocoa prices had surged by over 20%, peaking at 5.5-month highs on Thursday, driven by concerns surrounding the impending West African cocoa crop. Heavy rainfall in key cocoa-producing countries like Ivory Coast and Ghana has resulted in flooding, obstructing farmers’ access to their farms and export ports, thereby threatening global supply chains. Cumulative rainfall figures for June have already approached the typical monthly average for both countries, raising concerns over potential crop damage.
Excessive moisture in these regions can lead to brown rot disease, risking reduced yields and jeopardizing the harvest. Additionally, the market is facing medium-term support related to weather patterns. The Japan Meteorological Agency confirmed on June 10 that an El Niño pattern had developed across the equatorial Pacific, typically associated with warmer, drier weather in West Africa. This pattern jeopardizes soil moisture levels, stressing cocoa trees and potentially decreasing yield quality.
The U.S. National Oceanic and Atmospheric Administration (NOAA) has estimated a substantial 67% probability of a “Super El Niño” this year, potentially one of the strongest on record. Early surveys of the West African cocoa crop for 2026/27 are indicating below-average cherelle formation on cocoa trees, which signals a concerning forecast for the main cocoa harvest set to begin in October.
Despite the upward pressures, cocoa prices were recently influenced by signs of ample supply. The Ivory Coast reported an increase of over 260,000 metric tons of cocoa that has been cleared for export this season. Cumulative shipments from the Ivory Coast reached 1.95 million metric tons for the current marketing year, reflecting an 18.9% increase year-on-year. However, the Ivory Coast also projected a 10.8% year-on-year decline in cocoa production for the 2025/26 season, reducing expectations from 1.85 million metric tons to 1.65 million metric tons.
Rising cocoa inventories have added further bearish sentiment to the market, with ICE cocoa stocks hitting a 1.75-year high of 2,948,286 bags. Weak global demand for cocoa products has also contributed to downward pressure on prices. The National Confectioners Association reported a 3.8% decline in North American cocoa grindings year-on-year for the first quarter, while the European Cocoa Association noted a more pronounced 7.8% drop, marking the lowest figures for a first quarter in 17 years.
Conversely, the Cocoa Association of Asia revealed unexpected growth, with Q1 cocoa grindings rising by 5.2% year-on-year. Projections from Nigeria’s Cocoa Association suggest that cocoa production in Nigeria, the world’s fifth-largest cocoa producer, is expected to decrease by 11% for the 2025/26 crop year.
Significant cuts to farmers’ pay announced by both Ghana and the Ivory Coast have also impacted the market, with Ghana reducing prices by nearly 30% and the Ivory Coast implementing a 57% cut for the mid-crop harvest. Given that these two nations account for more than half of global cocoa supply, such changes amplify concerns of a reduced global cocoa surplus.
Recent forecasts by StoneX have indicated a decline in the projected global cocoa surplus, reducing estimates for both the 2026/27 and 2025/26 seasons due to anticipated impacts from the El Niño weather pattern. With multiple factors at play, the outlook for cocoa prices remains complex, with significant volatility likely in the coming months as market participants react to changing conditions and supply dynamics.
