Cocoa Prices Surge Amid Supply Concerns
On Wednesday, cocoa prices made notable gains, with New York cocoa climbing 5.09% to close at +293, marking a six-month high. Meanwhile, London cocoa rose by 5.35% to end at +228, hitting a seven-month peak.
The sharp increase in cocoa prices over the past few weeks can be attributed to severe rainfall in key producing regions, Ivory Coast and Ghana. This heavy rain has disrupted access to farms and ports, raising alarms about global cocoa supplies. Furthermore, the excess moisture poses risks such as brown rot and black pod disease, which could significantly lower yields this season.
Looking ahead, weather concerns continue to support cocoa prices. On June 10, the Japan Meteorological Agency confirmed the onset of an El Niño in the equatorial Pacific. This phenomenon typically brings dry conditions to West Africa, stressing cocoa trees and leading to reduced yields. The National Oceanic and Atmospheric Administration (NOAA) has indicated a 67% chance of a Super El Niño this year, potentially one of the strongest on record.
Initial assessments of the 2026/27 Ivorian cocoa crop show below-average cherel formation, highlighting weak prospects for the upcoming main harvest in September. Early crop estimates suggest this season’s production could be around 1.8 million metric tons (MMT), a decline of 18% from 2.2 MMT in 2025/26. The market is eager for a new survey in July to clarify the crop’s expected size.
On the flip side, rising cocoa inventories also place downward pressure on prices. As of Wednesday, ICE cocoa stocks reached 3,099,445 bags, the highest in nearly two years. Amid indications of strong supply, prices faced additional pressure last month. For instance, Ivory Coast raised its cocoa arrival estimates by over 260,000 tons this season, reporting that farmers have delivered 2.04 MMT to ports, a 20% increase compared to the previous year. However, forecasting for 2025/26 suggests production might drop to 1.65 MMT, a 10.8% decline from 2024/25 figures.
A surge in global cocoa supplies is another factor weighing on prices. A recent Bloomberg report indicated that Nigeria’s cocoa exports in May saw a year-on-year increase of 28%, totaling 18,034 tons. Meanwhile, weaker global demand adds to the price pressures; data from the National Confectionery Association revealed that North American cocoa milling volume in Q1 fell 3.8% year-on-year, while the European Cocoa Association noted a more significant drop of 7.8% in the same timeframe, reaching levels not seen in 17 years. In contrast, Asia experienced a rise in cocoa crushing volume, which unexpectedly increased by 5.2% year-on-year.
Despite the upward pressures, declining cocoa supplies from Nigeria, the fifth-largest producer, may provide some support. The Cocoa Association of Nigeria anticipates a production decrease to 305,000 tons for the 2025/26 season, down 11% from the prior crop.
Significantly, Ghana has reduced the official price paid to cocoa farmers for the 2025/26 growing season by nearly 30%, while Ivory Coast announced substantial cuts to farmers’ wages in March. Together, these two countries are responsible for over half of the world’s cocoa production.
Nonetheless, there are indications that the global cocoa surplus may shrink, which could bolster prices. On April 29, StoneX revised down its estimate for the global cocoa surplus in 2026/27 to 149,000 tons from a previous forecast of 267,000 tons, citing potential risks to West African crops from the anticipated El Niño. Additionally, forecasts for the current crop year have also been reduced.
