December ICE NY cocoa (CCZ26) closed up +123 (+1.85%) on Monday, and September ICE London cocoa #7 (CAU26) did not trade, with markets in the UK closed for a holiday.

NY cocoa extended its sharp three-session rally on Monday and posted an 11-month high.  Concerns about the quality of this year’s West African cocoa crops are underpinning cocoa prices.  Cloudy weather and limited sunshine in the Ivory Coast and Ghana are allowing black pod disease to spread, lowering cocoa bean quality.   

Concern about a smaller cocoa crop from Ghana, the world’s second-largest cocoa producer, is bullish for prices.  On August 20, Ghana’s Cocoa Board said that after a field survey of pod counts, it estimates the 2026/27 Ghana cocoa crop will be 650,000 MT, down -13% from 750,000 MT last year.   

Cocoa prices also have underlying support from early surveys of the 2026/27 Ivory Coast cocoa crop, which show below-average cherelle formation on cocoa trees, signaling a weak outlook for the main cocoa harvest, which begins in September.  Early crop assessments show poor pod development and an average estimate of 1.8 MMT for the season starting in September, down -18% from about 2.2 MMT in 2025/26. 

Also on the positive side, StoneX on July 29 cut its 2026/27 global cocoa surplus estimate to 25,000 MT from a forecast of 149,000 MT in April, citing risks to the West African cocoa crop from an expected El Niño.  In addition, Transgraph Consulting on July 23 forecast that the global cocoa surplus in 2026-2027 will shrink to 80,000 metric tons from 415,000 MT in 2025-2026, mainly due to an expected decline in production to 4.87 MMT in 2026-2027 from 5.11 MMT in 2025-2026. 

In a bullish factor, Ghana’s cocoa regulator, COCOBOD, on July 30 projected Ghana’s 2026/27 cocoa production could fall to 450,000 MT to 550,000 MT from 750,000 MT projected for 2025/26 due to the combined effects of swollen shoot disease, aging cocoa farms, and the likelihood of adverse weather from the El Niño weather pattern. However, production is strong for the current marketing year.  Ghana’s cocoa board reported last Wednesday that 750,000 MT of cocoa has been harvested for the 2025/26 season, which ends at the end of this month, up +25.6% from 597,000 MT in 2024/25. 

Cocoa prices have underlying medium-term support from future weather concerns.  On July 8, the US Climate Prediction Center said the El Niño weather pattern that emerged across the equatorial Pacific last month will likely be one of the strongest in more than 75 years.  An El Niño typically brings warmer, drier conditions to West Africa, reducing soil moisture, stressing cocoa trees, and lowering yields. 

Current cocoa supplies are adequate, a bearish factor for prices.  Last Friday, Bloomberg reported that Nigeria’s July cocoa bean exports rose +18% y/y to 16,052 MT.  Nigeria is the world’s fifth-largest cocoa producer.

Also, cumulative data from the Ivory Coast, the world’s largest cocoa producer, showed that farmers shipped 2.11 MMT of cocoa to ports in the current marketing year (October 1, 2025, through August 2, 2026), up +20% from the same period a year ago. 

Rising cocoa inventories are negative for prices after ICE cocoa inventories rose to a 2-year high of 3,411,016 bags on Monday.

Cocoa demand was mixed in Q2.  On July 16, the European Cocoa Association reported that Q2 European cocoa grindings fell -4.6% to 316,366 MT, a larger decline than the -1.5% y/y expected and the lowest level for Q2 in 6 years.  However, the National Confectioners Association reported that Q2 North American cocoa grindings unexpectedly rose by +7.7% y/y to 109,659 MT, well above expectations of a -1% y/y decline, easing cocoa demand fears.  Also, Asian cocoa demand improved after the Cocoa Association of Asia reported that Q2 Asian cocoa grindings rose by +25% y/y to 224,646 MT, well above expectations of +9% y/y.