Cocoa futures rose on Friday as traders covered short positions into the weekend, helping both key contracts end higher after a period of demand concerns and supply buildup. July ICE New York cocoa finished up 69 points, or 1.86%, while July ICE London cocoa No. 7 gained 7 points, or 0.24%.
Market pricing appeared to balance near-term softness—prompted by heavier arrival and inventory data—with medium-term support tied to weather risks in West Africa and cost pressures linked to shipping disruptions in the Middle East.
Key takeaways
- Price move: July ICE New York cocoa closed up 1.86%; July ICE London cocoa No. 7 closed up 0.24%.
- Catalyst: Traders bought back short positions after recent weakness in related coffee markets.
- Supply pressure remains: Ivory Coast port arrivals and near-record global inventories pointed to abundant cocoa availability earlier in the week.
- Weather and crop signals offer support: El Niño formation and early surveys of the 2026/27 crop helped steady prices.
- Demand uncertainty persists: Multiple regions reported year-over-year declines in grindings, keeping upside limited.
What drove the move
Friday’s gains were attributed largely to short-covering after cocoa had come under pressure earlier in the week. The broader complex also saw support from coffee price action, with the ICE coffee market sliding to a multi-week low before stabilizing late in the week—an environment that can encourage algorithmic and discretionary rebalancing across soft commodities.
Fundamentals, however, remained mixed. The Ivory Coast boosted its estimate of cocoa that has reached its ports, with cumulative data showing farmers shipped 1.95 million metric tons to ports in the current marketing year (October 1, 2025, through June 7, 2026), up 18.9% from the same period a year earlier. The country also projected 2025/26 cocoa production would fall 10.8% year over year to 1.65 million metric tons, down from 1.85 million metric tons in 2024/25.
At the same time, inventories continued to weigh on sentiment. ICE cocoa inventories rose to a 1.75-year high of 2,929,074 bags last Friday and were slightly below that level at 2,917,793 bags on Friday.
Market reaction: why support and drag competed
The near-term inventory picture has been a key reason cocoa struggled earlier in the week, but several countervailing factors helped cushion the decline and enabled Friday’s rebound.
Weather risk is one of the principal supports. Japan’s Meteorological Agency confirmed that an El Niño pattern had formed across the equatorial Pacific. According to the U.S. National Oceanic and Atmospheric Administration (NOAA), there is a 67% chance of a “Super El Niño” this year, described as among the strongest on record. Warmer, drier conditions associated with El Niño can be damaging for cocoa in West Africa.
Additional support came from early crop indicators for the 2026/27 West African harvest. Early surveys pointed to below-average cherelle formation, which typically signals a weaker main crop outlook beginning in October.
Beyond weather, cost-related disruption also offered backing. The prolonged closure of the Strait of Hormuz has been cited as a factor complicating global shipping flows and increasing the expenses that importers face—through impacts on fertilizer supplies, freight rates, insurance costs, and fuel prices.
Still, demand data continued to limit follow-through. The National Confectioners Association reported North American Q1 cocoa grindings fell 3.8% year over year to 106,087 MT. In Europe, the European Cocoa Association said Q1 grindings dropped 7.8% year over year to 325,895 MT, which it described as the lowest for a Q1 in 17 years. By contrast, the Cocoa Association of Asia reported Q1 Asian grindings rose 5.2% year over year to 223,503 MT, exceeding expectations for a decline.
Supply outlook and policy signals
While global inventories were heavy, some regional supply signals were supportive. Smaller cocoa supplies from Nigeria helped offset broader abundance concerns. Bloomberg reported that Nigerian cocoa exports in April fell 20% year over year to 14,921 MT. Nigeria’s Cocoa Association also projected that Nigerian production in 2025/26 would decline 11% year over year to 305,000 MT, from an anticipated 344,000 MT for 2024/25.
In West Africa, producer pricing decisions added another layer of uncertainty. Ghana cut the official price it pays cocoa farmers by nearly 30% for the 2025/26 growing season, and the Ivory Coast said it would cut farmers’ pay by 57% effective for the mid-crop harvest that began in March. Together, the two countries produce more than half of the world’s cocoa.
On the balance-sheet front, expectations for the global surplus were revised downward. StoneX cut its 2026/27 global cocoa surplus estimate to 149,000 MT from a January forecast of 267,000 MT, citing risks to the West African crop tied to an expected El Niño. It also reduced its 2025/26 surplus forecast to 247,000 MT from 287,000 MT.
Looking ahead, investors will likely focus on whether the market’s near-term supply surplus continues to dominate pricing or whether weather-driven crop risk and early formation signals increasingly outweigh inventory concerns. Key developments to watch include further updates on El Niño impacts in West Africa, additional revisions to surplus estimates by major forecasters, and fresh grindings data as demand trends become clearer for the next quarter.
