Cocoa prices are strengthening sharply as weather-related supply concerns in West Africa begin to compete with evidence of abundant current-season production and rising exchange inventories. December ICE New York cocoa is around $5,870 per metric ton, while December London cocoa is also advancing, with both markets reaching two-week highs.

The immediate catalyst is heavy rainfall in Ivory Coast, where damaged roads and bridges are disrupting the movement of cocoa to ports. Beyond the current logistical problems, the potential development of a strong El Niño pattern is creating a more significant medium-term risk to the 2026/27 West African crop.

The market therefore faces a growing contrast between abundant nearby supply and potentially tighter future production.

Market Snapshot

Market Driver	Current Situation	Forward Outlook
December NY Cocoa	Around $5,870/MT	Short-term momentum improving
December London Cocoa	Around £4,400/MT	Following NY higher
Ivory Coast shipments	2.18 MMT	Strong current supply
Ivory Coast 2025/26 production	2.06 MMT	Up 30% year-on-year
ICE inventories	3.53 million bags	Highest in 2.25 years
Ivory Coast 2026/27 crop estimate	Around 1.8 MMT	Potential 18% decline
Ghana 2026/27 crop estimate	650,000 MT	Around 13% lower
Global surplus estimates	Narrowing	Increasing medium-term support
El Niño risk	Increasing	Potential threat to West African yields

Cocoa Prices Regain Momentum

Cocoa futures are showing strong upside momentum after falling to approximately two-and-a-quarter-month lows last week.

December New York cocoa has gained more than 3% in the latest move, while London cocoa is also advancing by more than 3%.

The recovery indicates that traders are beginning to place greater weight on weather and logistical risks following the recent sell-off.

However, the rally is developing against a backdrop of significantly higher inventories and strong current-season production. That means the market still needs confirmation that the emerging 2026/27 supply risks are large enough to offset the availability of cocoa from the current crop.

Heavy Rainfall Disrupts Ivory Coast Deliveries

The immediate supply concern is centred on Ivory Coast, the world’s largest cocoa producer.

Excessive rainfall has reportedly damaged roads and bridges, making it more difficult for farmers and traders to move cocoa towards export ports.

This type of disruption can have an outsized short-term impact on futures because the market is highly sensitive to changes in the timing of physical deliveries.

If the logistical problems persist, the market could begin pricing a temporary tightening of nearby availability even though overall production remains strong.

El Niño Creates a Bigger Medium-Term Risk

The more important issue for the coming months is weather.

The US Climate Prediction Center expects the developing El Niño pattern to potentially become one of the strongest in more than seven decades.

El Niño conditions can produce warmer and drier weather across parts of West Africa. For cocoa, that can reduce soil moisture, increase stress on trees and negatively affect pod development and final yields.

This is particularly important because early indications for the 2026/27 crop are already showing weaker cherelle formation and below-average pod development.

If dry conditions develop at the wrong stage of the crop cycle, the market could move rapidly from a situation of surplus supply towards a much tighter production outlook.

Ivory Coast Production Remains a Major Bearish Factor

Despite the weather concerns, current Ivory Coast production remains exceptionally strong.

The country’s cocoa regulator reported approximately 2.06 million metric tons harvested during the 2025/26 season, representing an increase of around 30% from the previous season.

Cumulative shipments have also reached approximately 2.18 million metric tons, around 19.8% above the comparable period.

This provides the market with substantial nearby supply and remains one of the strongest arguments against an extended price rally in the immediate term.

The critical question is whether this strong supply can continue into the new marketing year.

ICE Cocoa Inventories Reach a Two-Year High

Exchange inventories are another significant bearish consideration.

ICE cocoa inventories have risen to approximately 3.53 million bags, the highest level in around two-and-a-quarter years.

Higher exchange stocks indicate that physical availability is currently more comfortable than it was during previous periods of cocoa tightness.

For prices to sustain a major recovery, the market will need to see either inventory growth slow or demand improve sufficiently to absorb the available supply.

2026/27 Ivory Coast Crop Faces Increasing Risk

The outlook becomes considerably more supportive further forward.

Early surveys of the 2026/27 Ivory Coast crop suggest poor cherelle formation and weaker pod development.

Current estimates place the coming crop at approximately 1.8 million metric tons, potentially around 18% below the approximately 2.2 million tons produced during 2025/26.

Cloudy conditions and limited sunshine have also increased concerns about black pod disease, potentially affecting both yields and bean quality.

This creates a potential supply problem for the second half of the current price cycle even if inventories remain comfortable in the near term.

Ghana Production Outlook Is Also Deteriorating

Ghana provides another bullish supply signal.

The country’s cocoa authorities have reduced expectations for the 2026/27 crop, with estimates around 650,000 MT, approximately 13% below the previous season’s 750,000 MT.

COCOBOD has provided an even wider potential production range of approximately 450,000 to 550,000 MT, citing swollen shoot disease, ageing farms and the risk of adverse El Niño weather.

Ghana’s current production remains strong, with approximately 750,000 MT harvested during 2025/26, but the forward outlook is becoming considerably less comfortable.

Global Cocoa Surplus Could Narrow

The global balance sheet is beginning to move in a more supportive direction.

StoneX has reduced its estimate of the 2026/27 global cocoa surplus to approximately 25,000 MT, compared with 149,000 MT previously.

Transgraph Consulting has also projected a substantially smaller surplus of approximately 80,000 MT, compared with 415,000 MT during 2025/26.

These estimates point towards a significant reduction in the global cushion of supply.

If production declines across West Africa while demand remains stable or improves, the market could move towards a much tighter balance during the next crop cycle.

Demand Remains Mixed

Demand is currently providing conflicting signals.

European cocoa grindings declined approximately 4.6% year-on-year in Q2, reaching the lowest level for the quarter in six years. The decline highlights continued pressure on European chocolate demand and consumer spending.

North American grindings, however, increased approximately 7.7% year-on-year, substantially outperforming expectations.

Asian demand has also strengthened, with Q2 grindings increasing approximately 25% year-on-year.

The regional divergence means the global demand picture is not uniformly weak.

Chocolate Prices and Consumer Demand

Demand concerns remain an important downside risk.

Lindt & Sprüngli has reduced chocolate prices for a second time this year and lowered its 2026 organic sales-growth outlook to approximately 0%–2%, from an earlier forecast of 4%–6%.

The company cited subdued consumer sentiment.

Lower chocolate prices could eventually encourage consumption, but weaker consumer confidence and reduced discretionary spending remain potential constraints on cocoa demand.

For the futures market, the key question is whether improving demand in North America and Asia can offset softer European consumption.

Bullish Scenario

Cocoa could extend its recovery if:

• Heavy rainfall continues disrupting Ivory Coast deliveries.
• El Niño develops into a strong West African weather threat.
• Ivory Coast crop development deteriorates.
• Ghana production falls towards the lower end of forecasts.
• Black pod disease damages crop quality.
• Global grindings remain resilient.
• The projected global surplus narrows further.
• ICE inventories begin declining.

Under this scenario, the market could move beyond the current two-week highs and begin rebuilding a larger weather premium.

Bearish Scenario

The downside case would strengthen if:

• Ivory Coast logistics return to normal.
• Strong current-season production continues.
• Producer deliveries remain high.
• ICE inventories continue increasing.
• European demand remains weak.
• Global chocolate consumption slows.
• El Niño fails to produce significant damage to West African crops.

In that environment, the recent rally could prove temporary and cocoa could return towards its recent lows.

Cocoa Price Outlook

The immediate trend has turned more constructive after the latest recovery, but the market remains caught between strong current supply and increasingly concerning future crop prospects.

The first test for the bulls is whether New York cocoa can sustain its move above the recent two-week highs.

A continuation higher would indicate that traders are placing greater emphasis on the 2026/27 production risks.

Failure to maintain the rally, particularly alongside rising ICE inventories, would suggest that current supply remains the dominant market influence.

The next major directional move is therefore likely to depend on whether weather risk or physical supply becomes the stronger narrative.

Supply Outlook

The short-term supply picture remains relatively comfortable.

Ivory Coast production and shipments are significantly higher than the previous season, while ICE inventories have reached their highest level in more than two years.

However, the forward supply outlook is becoming substantially less certain.

Lower early crop estimates, weak cherelle formation, disease concerns and the potential impact of El Niño all point towards a more challenging 2026/27 production cycle.

The market may therefore transition from a current surplus story to a future supply-risk story.

Demand Outlook

Demand remains mixed geographically.

European grindings are showing weakness, while North American and Asian processing activity has been considerably stronger.

This divergence will remain important for prices.

If Asian and North American demand continues to expand while European demand stabilises, the global market could absorb a significant portion of the available supply.

Conversely, a broad deterioration in chocolate consumption would make it much harder for cocoa prices to sustain a weather-driven rally.

Louis Roche Analysis

Cocoa is increasingly becoming a market of two timeframes.

Today, the market has abundant supply, strong Ivory Coast production and elevated ICE inventories. Those factors should limit the ability of prices to sustain an unchecked rally.

Looking forward, however, the situation becomes more complicated. Early indications for the 2026/27 West African crop are weaker, Ghana’s production outlook has deteriorated and the potential for a strong El Niño introduces a significant weather variable.

The most important development to watch is therefore whether the market begins to discount the next crop before the current supply surplus has been fully absorbed.

If that happens, cocoa could build a significant weather premium relatively quickly.

For now, I see the latest rally as a constructive shift rather than confirmation of a new long-term bull market. Sustained strength above the recent highs, combined with evidence of deteriorating crop conditions or tightening inventories, would strengthen the bullish case considerably.

Coming Sessions

Cocoa traders will be watching:

• Ivory Coast rainfall and transport conditions
• West African crop development
• El Niño forecasts
• Ghana production estimates
• Ivory Coast producer deliveries
• ICE warehouse inventories
• European grindings
• North American grindings
• Asian cocoa demand
• Chocolate consumption trends

The balance between rising current inventories and declining future production expectations will remain the central theme.

Today Markets View

Today Markets sees cocoa as short-term bullish but fundamentally conflicted.

Current supply remains abundant, but the market is beginning to price the possibility that the next West African crop could be materially smaller.

The strongest upside catalyst would be confirmation that El Niño is damaging crop development at the same time that current deliveries become disrupted.

The strongest downside signal would be continued inventory growth combined with weak European demand.

The market is therefore approaching an important transition point where future supply risk could become more important than today’s surplus.

Currency Hedger View

The US dollar remains an important secondary factor for internationally traded cocoa.

A stronger dollar can increase the effective cost of cocoa for buyers using other currencies, potentially placing additional pressure on international demand. Conversely, a weaker dollar can improve purchasing power for overseas buyers and provide a supportive backdrop for dollar-denominated commodities.

For cocoa producers, exporters, manufacturers and international businesses with USD exposure, movements in the dollar can therefore influence margins alongside the underlying cocoa price.

Currency Hedger monitors the interaction between FX markets, commodity prices, interest rates, central-bank policy and global macroeconomic conditions to help businesses assess their currency exposure and potential hedging requirements.

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Contributor: Louis Roche – Today Markets

Disclaimer: Market analysis prepared for Today Markets. For informational purposes only and not intended as investment, trading, financial or commodity advice.