Cocoa prices are under renewed pressure as rising exchange inventories and evidence of softer chocolate demand outweigh near-term concerns over weather disruption in West Africa.

December New York cocoa is trading around $5,690 per metric ton, while December London cocoa is near £4,230 per ton, after both contracts came under significant selling pressure. The decline follows a sharp reversal from recent two-week highs and highlights the market’s increasingly divided fundamental picture.

Near-term supply remains abundant, particularly from the Ivory Coast, while medium-term risks are becoming more supportive as early assessments point to weaker West African production, adverse weather and potential El Niño disruption.

Market Snapshot

Market Indicator	Current Position
December New York Cocoa	Lower 2.85%
December London Cocoa	Lower 3.45%
ICE Cocoa Inventories	3.539 million bags
Inventory Position	2.25-year high
Ivory Coast 2025/26 Shipments	2.18 MMT
Ivory Coast Shipment Growth	+19.8% YoY
Ivory Coast 2025/26 Harvest	2.06 MMT
Ivory Coast Harvest Growth	+30% YoY
Ivory Coast 2026/27 Early Estimate	1.8 MMT
Ghana 2026/27 Estimate	650,000 MT
Ghana 2025/26 Production	750,000 MT
StoneX 2026/27 Global Surplus	25,000 MT
Transgraph 2026/27 Surplus	80,000 MT

Cocoa Prices Reverse Lower

Cocoa futures are facing renewed selling pressure after recently reaching two-week highs.

December New York cocoa has fallen approximately 2.85%, while December London cocoa has declined around 3.45%.

The immediate catalyst is the continued increase in ICE inventories, which have climbed to 3,538,981 bags, the highest level in approximately 2.25 years.

Rising exchange stocks are an important bearish signal because they indicate that readily available cocoa supplies are increasing at a time when demand is being questioned.

The market therefore remains focused on whether the inventory build represents a temporary accumulation ahead of stronger demand or evidence of a more persistent supply-demand imbalance.

ICE Inventories Reach a 2.25-Year High

The rise in ICE inventories is currently one of the clearest bearish factors in the market.

Stocks have reached approximately 3.54 million bags, placing exchange inventories at their highest level in 2.25 years.

The increase is significant because cocoa prices have previously benefited from tight inventories and concerns over physical availability.

A sustained inventory build would weaken that scarcity premium.

For the bullish case to regain control, traders will need to see evidence that inventories are beginning to stabilise or decline, particularly as the market progresses through the new cocoa season.

Cargill Signals Pressure on Cocoa Demand

Demand concerns are also becoming more important.

Cargill reported mark-to-market losses on cocoa for the quarter ending August 31, suggesting that higher cocoa costs have been difficult to pass through fully to customers.

This is significant for the market because extremely high cocoa prices can eventually reduce consumption, encourage manufacturers to reformulate products or pressure chocolate margins.

The issue is no longer simply whether cocoa is available. Traders are increasingly assessing whether consumers and chocolate manufacturers are willing and able to absorb elevated prices.

Ivory Coast Supply Remains Abundant

The Ivory Coast continues to provide substantial supply to the international market.

Cumulative shipments reached approximately 2.18 million metric tons during the current international cocoa marketing period, representing an increase of approximately 19.8% from the comparable period a year earlier.

The scale of the increase demonstrates how much cocoa has entered the global supply chain from the world’s largest producer.

The Ivory Coast regulator also reported that the country harvested approximately 2.06 million metric tons during the 2025/26 season, up approximately 30% from 1.58 million tons the previous year.

This exceptional increase is one of the primary reasons cocoa prices have struggled to maintain previous highs.

Weather Disruption Provides Short-Term Support

The supply picture is not entirely bearish.

Heavy rainfall in the Ivory Coast has reportedly damaged roads and bridges, disrupting transportation and slowing deliveries to ports.

This creates a temporary supply constraint and helped cocoa prices recover toward two-week highs before the latest inventory-driven sell-off.

The key question is whether these logistical problems represent a temporary disruption or develop into a broader threat to crop quality and export volumes.

For now, the market appears to be treating the issue as a short-term disruption rather than a structural supply shortage.

2026/27 Ivory Coast Crop Faces Greater Risks

The medium-term supply outlook is considerably less comfortable.

Early surveys of the 2026/27 Ivory Coast crop are pointing toward weaker production, with below-average cherelle formation and poor pod development.

Initial estimates put the upcoming crop at approximately 1.8 million metric tons, around 18% below the roughly 2.2 million tons produced in 2025/26.

Cloudy conditions and limited sunshine are also raising concerns about crop quality, while increased black pod disease could further reduce usable production.

This creates an important distinction for the cocoa market: current supply is abundant, but future supply may become considerably tighter.

El Niño Adds Medium-Term Risk

The potential return of a strong El Niño pattern is becoming increasingly important for cocoa.

The US Climate Prediction Center has indicated that the El Niño pattern emerging across the equatorial Pacific could become one of the strongest in more than 75 years.

For West Africa, El Niño typically increases the risk of warmer and drier conditions.

For cocoa trees, this can mean:

• lower soil moisture;
• increased plant stress;
• reduced pod development;
• lower yields;
• greater vulnerability during critical growing periods; and
• potential deterioration in bean quality.

If these conditions develop as expected, the current supply surplus could narrow considerably over the next crop cycle.

Ghana Production Outlook Weakens

Ghana provides another bullish medium-term signal.

The country’s Cocoa Board estimates that 2026/27 production could fall to around 650,000 metric tons, approximately 13% below the 750,000 tons expected for the previous crop year.

COCOBOD has also indicated that production could potentially fall into a much lower range of 450,000 to 550,000 metric tons, reflecting the effects of swollen shoot disease, ageing farms and adverse weather risks associated with El Niño.

However, current Ghanaian production remains strong.

The 2025/26 season is expected to finish around 750,000 metric tons, up approximately 25.6% from 597,000 tons in 2024/25.

This again highlights the difference between the current supply picture and the emerging 2026/27 outlook.

Global Surplus Estimates Are Narrowing

The medium-term balance is becoming less bearish.

StoneX has reduced its estimate for the 2026/27 global cocoa surplus to only 25,000 metric tons, down sharply from its previous estimate of 149,000 tons.

Transgraph Consulting has also projected that the global surplus could shrink to approximately 80,000 metric tons, compared with 415,000 tons in 2025/26.

The consultancy expects global production to decline to approximately 4.87 million metric tons in 2026/27 from 5.11 million tons in 2025/26.

These forecasts indicate that the current inventory surplus may not necessarily translate into another year of abundant supply.

Cocoa Demand Remains Mixed

Demand indicators remain divided geographically.

European cocoa grindings declined approximately 4.6% year-on-year in Q2 to 316,366 metric tons, marking the lowest Q2 level in six years.

That is a significant warning signal for consumption, particularly because the decline was considerably larger than expectations.

North American demand, however, was considerably stronger.

North American cocoa grindings increased approximately 7.7% year-on-year to 109,659 metric tons, substantially exceeding expectations for a decline.

Asian demand was even stronger, with Q2 grindings increasing approximately 25% year-on-year to 224,646 metric tons.

The global demand picture is therefore not uniformly weak. Europe is showing clear signs of pressure, while North America and Asia are providing meaningful offsets.

Bullish Scenario

The bullish case strengthens if medium-term supply risks begin to dominate the market.

Key bullish factors include:

• weaker 2026/27 Ivory Coast crop prospects;
• Ghana production falling;
• strong El Niño conditions;
• further black pod disease;
• continued rainfall-related logistical disruption;
• declining global production;
• narrowing global surplus estimates; and
• stronger Asian and North American grindings.

A sustained reduction in ICE inventories would provide particularly strong confirmation that the market is moving toward tighter physical conditions.

If prices regain recent highs, the market could begin pricing the 2026/27 supply risks more aggressively.

Bearish Scenario

The bearish scenario remains dominant if inventories continue to rise and demand weakens further.

The principal risks are:

• ICE stocks remaining at multi-year highs;
• continued strong Ivory Coast shipments;
• the 30% increase in Ivory Coast 2025/26 production;
• weak European grindings;
• consumers resisting high chocolate prices;
• processors struggling to pass costs through;
• further evidence of subdued chocolate consumption; and
• continued availability of West African cocoa.

A sustained move below recent lows would reinforce the view that the market is prioritising current physical abundance over future crop risks.

Cocoa Price Outlook

The near-term cocoa outlook remains bearish to neutral, while the medium-term picture is becoming increasingly balanced.

The immediate supply situation is comfortable, with Ivory Coast production and shipments running substantially ahead of the previous year and ICE inventories at a 2.25-year high.

However, the market is beginning to price a very different 2026/27 environment.

If Ivory Coast and Ghana production declines as early estimates suggest, and if El Niño damages West African growing conditions, the current surplus could narrow rapidly.

The key question is therefore when the market transitions from pricing current abundance to pricing future scarcity.

Supply Outlook

Near-term supply remains the major bearish influence.

Ivory Coast production has been exceptionally strong, while shipments are running almost 20% above the previous year.

However, early indications for the next crop are significantly weaker.

The combination of below-average cherelle formation, poor pod development, disease risks, ageing farms and potential El Niño-related weather stress could reduce West African production considerably.

The supply outlook is therefore shifting from abundant current availability toward increased medium-term uncertainty.

Demand Outlook

Demand remains the biggest uncertainty.

European consumption is clearly under pressure, while Cargill’s reported cocoa mark-to-market losses suggest processors are struggling with elevated input costs.

However, North American and Asian grindings are providing meaningful support.

If high cocoa prices continue to filter through to retail products, consumer resistance could increase. Conversely, if manufacturers successfully adjust pricing and demand stabilises, the market could absorb the current inventory overhang more rapidly.

Louis Roche Analysis

Cocoa remains one of the clearest examples of a market where current fundamentals and future fundamentals are moving in opposite directions.

The immediate picture is bearish. ICE inventories are at a 2.25-year high, Ivory Coast shipments are up almost 20%, and the country produced roughly 30% more cocoa during the latest season.

Demand is also showing signs of stress, particularly in Europe, while processor margins are being squeezed by historically high cocoa costs.

But looking forward, the picture becomes much more constructive.

Early assessments of the next Ivory Coast crop are significantly weaker, Ghana production is expected to decline, disease remains a concern and a strong El Niño could create substantial weather stress across West Africa.

The market therefore needs to determine whether today’s abundant inventories are sufficient to bridge the potential supply deficit developing into the next crop cycle.

For now, inventory levels and current West African shipments remain the dominant price drivers. A sustained decline in ICE stocks would be the clearest signal that the market is beginning to transition toward the tighter medium-term balance.

Coming Sessions

Traders will focus on:

• ICE cocoa inventory movements;
• Ivory Coast port arrivals and shipments;
• rainfall and growing conditions across West Africa;
• early development of the 2026/27 Ivory Coast crop;
• Ghana crop estimates;
• El Niño developments;
• black pod disease reports;
• European, North American and Asian grindings;
• processor margins and chocolate pricing; and
• technical price action following the recent sharp decline.

The next major move will likely depend on whether inventory growth continues or begins to reverse.

Today Markets View

Today Markets maintains a bearish near-term but increasingly constructive medium-term view on cocoa.

The current market remains well supplied, with record-level inventories and strong Ivory Coast production weighing on prices.

However, the supply outlook for the next crop is becoming substantially less comfortable. Lower Ghana production, weaker early Ivory Coast crop development and the potential impact of El Niño could significantly tighten the global balance.

The key signal to watch is the direction of ICE inventories. Continued increases would reinforce the bearish case, while a sustained inventory decline would provide early confirmation that the market is transitioning toward tighter supply.

Currency Hedger View

Cocoa is priced in global commodity markets, making currency movements an important secondary factor for producers, processors, traders and international buyers.

Movements in the US dollar can influence the effective cost of cocoa for buyers operating in other currencies, while changes in West African currencies can influence producer economics and export competitiveness.

For chocolate manufacturers and cocoa businesses with international purchasing obligations, currency volatility can therefore compound the impact of already elevated commodity prices.

Currency Hedger monitors the interaction between foreign exchange, commodities, interest rates, geopolitics and global trade flows to help businesses assess currency exposure around international transactions.

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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.