Today Markets Analysis
Cocoa futures advanced on Thursday as stronger-than-expected grinding data from Asia and Europe revived demand expectations, while heavy rainfall in Ivory Coast disrupted harvesting and deliveries to ports. December New York cocoa rose 1.67%, while London cocoa gained 1.04%.
The rally follows recent gains that pushed New York cocoa to a one-month high and London cocoa to a six-week high. However, the market faces conflicting fundamentals: early forecasts point to smaller West African crops in 2026/27, while rising exchange inventories and strong shipments from Ivory Coast indicate that supplies remain substantial.
The next phase will depend on whether stronger processing demand and emerging crop risks can outweigh the availability of existing stocks.
Market Snapshot
| Indicator | Latest Position |
|---|---|
| December 2026 New York cocoa | Up 1.67% |
| December 2026 London cocoa | Up 1.04% |
| Asian Q3 cocoa grindings | Up 29% year on year |
| European Q3 cocoa grindings | Up 3.2% year on year |
| ICE cocoa inventories | 3,588,033 bags |
| Ivory Coast 2026/27 crop estimate | Approximately 1.8 million tonnes |
| Ghana 2026/27 crop estimate | 450,000–650,000 tonnes, depending on forecast |
| Main upside risks | Weather disruption and smaller future crops |
| Main downside risks | High inventories and uncertain underlying demand |
Demand Outlook: Grinding Data Beat Expectations
Demand indicators provided the main positive catalyst for Thursday’s rally.
The Cocoa Association of Asia reported that third-quarter cocoa grindings increased 29% year on year to 233,767 tonnes, substantially exceeding expectations for 15% growth.
The European Cocoa Association also reported an unexpected 3.2% increase in third-quarter grindings to 348,215 tonnes, compared with market expectations for a 3.9% decline.
These figures suggest that processing activity was stronger than anticipated in two important cocoa-consuming regions. The surprise is significant because demand concerns have weighed on the market as elevated cocoa costs have pressured manufacturers.
However, grindings measure the amount of cocoa processed, not final chocolate sales alone. One strong quarter does not establish a sustained demand recovery, and future results will need to confirm that processors can maintain activity at current cost levels.
Supply Outlook: Heavy Rain Disrupts Ivory Coast Harvesting
Heavy rainfall in Ivory Coast, the world’s largest cocoa producer, has hindered access to farms as the new harvest begins. Damaged bridges and flooded roads have slowed deliveries to ports and made harvesting more difficult.
These disruptions could delay the movement of beans into export channels and support prices in the near term. The longer-term impact will depend on whether the weather affects total production and bean quality or primarily delays transportation.
Early assessments of the 2026/27 crop have also raised concerns. Below-average cherelle formation and weak pod development have contributed to an estimated crop of approximately 1.8 million tonnes, down around 18% from roughly 2.2 million tonnes in 2025/26.
The forecast remains provisional. Crop development, weather and disease pressure over the coming months will determine whether the projected reduction is realised.
Ghana Adds to Future Supply Concerns
Ghana, the world’s second-largest cocoa producer, faces a potentially weaker 2026/27 crop.
COCOBOD has warned that production could fall to between 450,000 and 550,000 tonnes, citing swollen shoot disease, aging farms and possible adverse weather linked to El Niño. A separate field-survey estimate put production at 650,000 tonnes, down from 750,000 tonnes in 2025/26.
The difference between these forecasts highlights the uncertainty surrounding next season’s output. Nevertheless, both point to risks from disease, farm productivity and weather.
For the current season, Ghana’s Cocoa Board reported that 750,000 tonnes had been harvested by August 26, up 25.6% from 597,000 tonnes in 2024/25. Strong current-season production therefore remains an important counterweight to concerns about the next crop.
Bullish Sentiment
- Stronger Asian processing demand: Grindings rose 29% year on year, well above expectations, suggesting processing activity was stronger than anticipated.
- Unexpected European growth: A 3.2% increase in European grindings contrasts with expectations for a decline.
- Harvest disruption in Ivory Coast: Heavy rain, damaged bridges and poor road access could delay deliveries and affect crop quality.
- Smaller future crop forecasts: Early assessments indicate weaker Ivory Coast production, while Ghana faces disease and weather-related risks.
- El Niño uncertainty: Potentially warmer and drier conditions in West Africa could reduce soil moisture and stress cocoa trees, although the eventual impact remains uncertain.
Bearish Sentiment
- Rising ICE inventories: Exchange stocks reached 3,588,033 bags, the highest level in approximately 2.25 years, indicating substantial available supply.
- Strong Ivory Coast shipments: Cumulative shipments reached 2.18 million tonnes in the reported international marketing-year period, up 19.8% year on year.
- Higher recent production: Ivory Coast reported a 30% increase in harvested output for the season ending June 2026, to 2.06 million tonnes.
- Demand affordability pressures: Processor Cargill reported mark-to-market losses on cocoa, suggesting difficulty passing elevated costs on to customers.
- Uncertain future crop estimates: Forecasts for Ghana differ considerably, while weather-related risks have not yet translated into confirmed production losses.
Price Forecast: What Traders Are Watching
The near-term outlook has improved following the strong grinding data and harvesting disruption in Ivory Coast. Further gains are possible if heavy rainfall continues to delay deliveries or if crop assessments confirm significant losses for 2026/27.
However, rising inventories remain a major obstacle to a sustained rally. If shipments remain strong and stock levels continue to increase, prices could struggle to maintain their recent advance despite positive demand surprises.
Traders should monitor subsequent grinding reports, West African port arrivals, crop-development assessments and ICE inventory changes. These indicators will help establish whether the market is moving towards a genuine supply deficit or simply experiencing a temporary price recovery.
Market Outlook for the Coming Sessions
Cocoa is being pulled in two directions. Better-than-expected processing data and risks to future West African production support prices, while high inventories and strong recent shipments indicate that supply remains available.
The market could remain volatile as traders reassess the balance between current stocks and the next crop. A sustained bullish trend would require evidence that demand is holding up and that projected production reductions are becoming more likely.
The key question is whether next season’s potential crop losses will be large enough to absorb existing inventories and offset the strong supply recorded during the current marketing year.
Currency Hedger View
Chocolate manufacturers, cocoa importers and food businesses face both commodity-price and foreign-exchange exposure. A change in cocoa futures can alter procurement costs, while movements in the US dollar or other payment currencies can further affect the final cost of imported beans and cocoa products.
Businesses should assess future purchase commitments, payment timing and currency exposure rather than assuming that a recent cocoa rally will continue. Appropriate currency hedging can help manage exchange-rate uncertainty, although it does not eliminate the underlying commodity-price risk.
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Contributor: Currency Hedger
Today Markets View
Cocoa prices are finding support from stronger Asian and European grinding data, heavy rainfall in Ivory Coast and concerns about West African production in 2026/27. Yet the market is not facing an unequivocal shortage: ICE inventories are rising, and recent Ivory Coast shipments and production have been strong.
The next sustained move will depend on whether demand continues to surprise positively and whether weather and disease materially reduce future output. Until those risks translate into tighter physical availability, high inventories remain a significant limit on further gains.
Analysis: Louis Roche – Today Markets
Disclaimer: This article is for informational and educational purposes only and does not constitute investment, trading or financial advice. Cocoa markets are volatile and can respond sharply to weather, crop estimates, inventories and changes in demand. Forecasts are uncertain, and readers should conduct their own research before making financial decisions.
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