Cocoa futures on ICE fell sharply for a second straight session on Wednesday as market participants pointed to ample global supply and rising inventories. December ICE New York cocoa settled down 298 points, or 4.54%, and December ICE London cocoa #7 closed down 238 points, or 4.94%, extending the selloff that had followed a week of recent strength.
Key takeaways
- Price move: December New York cocoa fell 4.54%, while December London cocoa #7 dropped 4.94% on Wednesday.
- Catalyst: Traders leaned on reports indicating well-supplied conditions and higher shipments and harvest data from key West African origins.
- Supply signals: ICE cocoa inventories rose to a two-year high, weighing on prices.
- Offsetting risks: Medium-term weather and crop-quality concerns (including disease) remain a structural support, particularly for the upcoming main harvest.
- Implication: Near-term price action is being driven more by inventory and shipping fundamentals than by weather hedging premium.
What drove the move
According to market coverage, cocoa prices slid on Wednesday as signs of ample supply reduced the perceived risk premium that had helped push prices higher earlier in the week. Barry Callebaut AG, the world’s largest cocoa processor, said the global cocoa market is well supplied, suggesting the industry may be better able to manage downside risks than it was during the 2023/24 El Niño episode that drove prices to record highs.
Supply indicators from the Ivory Coast—by far the largest cocoa-producing country—also added pressure. Data cited in the report showed farmers shipped 2.14 million metric tons (MMT) of cocoa to ports in the current marketing year (October 1, 2025, through August 30, 2026), an increase of 19% versus the same period a year earlier.
In parallel, the Ivory Coast cocoa regulator, Le Conseil du Café Cacao, reported that the country harvested 2.06 MMT of cocoa from June 2025 to June 2026, up 30% from 1.58 MMT a year earlier. Together, higher shipment and harvest figures reinforced the view that near-term supplies are sufficient.
Another key bearish input came from storage and inventory metrics. The report said ICE cocoa inventories rose to 3,411,776 bags on Tuesday, the highest level in two years. Higher warehouse stocks typically cap upside in cocoa by signaling that the market can absorb demand without immediate tightening.
Market reaction and what investors are watching
Wednesday’s decline followed a rebound that had seen New York cocoa reach an 11-month high on Monday and London cocoa post an 11-month high on Tuesday, driven by concerns about crop quality. Even though those crop concerns were still present, the market appeared to shift focus toward the supply side as inventories and origin volumes increased.
Alongside the bearish inventory trend, traders also weighed forward-looking production risks. The report highlighted that in the latest season West Africa’s cocoa quality has been under scrutiny due to black pod disease. Cloudy conditions and limited sunshine in the Ivory Coast and Ghana were cited as factors that could allow the disease to spread, reducing bean quality and supporting prices over the medium term.
However, the immediate question for investors is whether quality concerns are strong enough to offset rising stocks and improving flow statistics in the near months. With inventories at a two-year high, the market has less urgency to price tightness—meaning any bullish weather or disease headlines need to be especially compelling to reverse the momentum.
Forward crop outlook: support and uncertainty
While Wednesday’s selloff leaned on supply abundance, multiple forecasts cited in the report suggest future production could tighten if disease and weather conditions worsen. On the Ghana side, the report said the Ghana Cocoa Board estimated the 2026/27 cocoa crop at 650,000 metric tons, down 13% from 750,000 metric tons the prior year, based on a field survey of pod counts.
For the Ivory Coast, early assessments referenced in the report pointed to below-average cherelle formation, which indicates weak pod development. The report cited an average estimate of 1.8 MMT for the season beginning in September, down 18% from about 2.2 MMT in 2025/26—supportive if it translates into lower final output.
Additionally, the report cited revisions to global surplus outlooks by industry analysts. StoneX cut its 2026/27 global cocoa surplus estimate to 25,000 MT from a prior forecast of 149,000 MT, pointing to risks to the West African crop tied to an expected El Niño. Transgraph Consulting was also cited as expecting the global surplus in 2026-2027 to narrow to 80,000 metric tons from 415,000 metric tons in 2025-2026, mainly due to lower projected production.
Still, the near-term inventory build and stronger current-year harvests underscore uncertainty about timing. The report noted that production is strong for the current marketing year in Ghana, with 750,000 MT harvested for the 2025/26 season, up 25.6% from 597,000 MT in 2024/25, which can keep immediate supply pressures elevated even if later-season risks grow.
Bigger picture: weather premium vs. availability
According to the report, medium-term support for cocoa prices remains tied to weather risk. The US Climate Prediction Center said the El Niño pattern forming across the equatorial Pacific is likely to be one of the strongest in more than 75 years. Typically, an El Niño can bring warmer and drier conditions to parts of West Africa, stressing cocoa trees and potentially reducing yields.
At the same time, the market is balancing weather hedging premiums against evidence of adequate availability. The report cited Bloomberg coverage that Nigeria’s July cocoa bean exports rose 18% year over year to 16,052 MT, indicating continued export capacity from another major origin.
Demand data was also described as mixed. The European Cocoa Association reported Q2 Europe grindings fell 4.6% to 316,366 MT, while the National Confectioners Association reported Q2 North American grindings rose 7.7% year over year to 109,659 MT. In Asia, the report cited Cocoa Association of Asia figures showing Q2 grindings increased 25% year over year to 224,646 MT. This mix suggests demand is not uniformly weakening, which can influence how quickly cocoa markets rebound once supply concerns ease.
What to watch next: Traders are likely to monitor further Ivory Coast and Ghana crop developments, especially any updates on disease pressure, and continued changes in ICE inventory levels. Near-term price direction may also depend on upcoming demand indicators for major grinding regions and additional guidance from processors and crop forecasters as the West African growing season progresses and the main harvest begins.
