ICE cocoa futures finished mixed on Wednesday, reflecting a market that is weighing improving supply expectations against renewed weather risk for the 2026/27 growing season. September ICE New York cocoa closed down 16 points, or 0.31%, while September ICE London cocoa #7 ended up 1 point, or 0.03%.
Prices consolidated after Tuesday’s 3.5-week lows, helped by an updated forecast that points to a much smaller global surplus than previously expected, while fresh data continued to show strong port arrivals from key producing regions.
Key takeaways
- Price move: September ICE New York cocoa fell 0.31%, while September ICE London cocoa #7 rose 0.03%.
- Catalyst: StoneX cut its 2026/27 global cocoa surplus outlook, citing El Niño-related risks to the West African crop.
- Market implication: The bearish impact of rising inventories remains a counterweight, limiting follow-through on gains.
- Demand signal: Q2 grindings were mixed across regions, with North American and Asian consumption showing growth while European activity declined.
- What to watch: Ongoing Ivory Coast crop development and weather updates for El Niño conditions.
What drove the move
Wednesday’s mixed settlement followed a two-week stretch of pressure that culminated in Tuesday’s 3.5-week lows. While supply dynamics continued to weigh on the complex, the session’s tone improved after StoneX lowered its 2026/27 surplus estimate to 25,000 metric tons from a forecast of 149,000 metric tons made in April, attributing the change to heightened risks to West Africa’s cocoa crop from an expected El Niño.
At the same time, data on near-term availability reinforced concerns about adequate supplies. According to Monday’s cumulative shipment figures from the Ivory Coast, farmers shipped 2.11 million metric tons of cocoa to ports in the current marketing year (October 1, 2025, through July 26, 2026), up 21% year over year.
Broader export flows also pointed to steadier supply outside the Ivory Coast. Bloomberg reported that Nigerian cocoa exports rose 30% year over year in June to 18,922 metric tons.
Despite the bearish supply signals, losses were capped by the market’s focus on the transition to the 2026/27 season. Underlying support has been tied to early surveys of the Ivory Coast’s crop, including reports of below-average cherelle formation—an indicator that can point to weaker yields for the main harvest that begins in September. However, Expana said Thursday that more recent surveys show a substantial improvement in cocoa pod counts compared with earlier assessments, keeping the crop outlook in flux.
Market reaction and what traders are weighing
Inventories remained one of the clearest bearish inputs. Data cited in the report showed ICE cocoa inventories rose to a two-year high of 3,375,119 bags on Tuesday, a level that typically weighs on nearby price structure by signaling abundant physical availability.
Demand readings across major consuming regions added to the mixed picture. According to the European Cocoa Association, Q2 European cocoa grindings fell 4.6% year over year to 316,366 metric tons, worse than the 1.5% decline expected and the lowest Q2 level in six years. In contrast, the National Confectioners Association reported that Q2 North American cocoa grindings unexpectedly increased 7.7% year over year to 109,659 metric tons, compared with expectations for a 1% contraction.
In Asia, the Cocoa Association of Asia said Q2 grindings rose 25% year over year to 224,646 metric tons, surpassing expectations of 9% growth. The uneven regional pattern suggested that some concerns about weakening demand have eased, but not uniformly across the market.
Crops, weather and surplus expectations
Weather risk has been a key driver of medium-term support for cocoa futures, particularly as market participants price the strength and timing of El Niño conditions. The U.S. Climate Prediction Center said on July 8 that the El Niño pattern that emerged across the equatorial Pacific last month is likely to be one of the strongest in more than 75 years. An El Niño often brings warmer, drier conditions to West Africa, which can reduce soil moisture and stress cocoa trees, potentially lowering yields.
Supply projections for the upcoming season also supported a tighter surplus narrative. According to a forecast from Transgraph Consulting released last Thursday, the global cocoa surplus in 2026–2027 is expected to shrink to 80,000 metric tons from 415,000 metric tons in 2025–2026. The change is attributed largely to lower production in 2026–2027, forecast at 4.87 million metric tons versus 5.11 million metric tons for 2025–2026.
Nigeria’s production outlook added another constraint for later supply expectations. Nigeria’s Cocoa Association projected that Nigerian cocoa production in 2025/26 would fall 11% year over year to 305,000 metric tons, down from a projected 344,000 metric tons in 2024/25.
Still, uncertainty persists in both direction and timing. While initial Ivory Coast surveys indicated a weaker season, the reported improvement in pod counts suggested that early estimates could be revised as the crop develops.
Bigger picture for investors
Wednesday’s price action underscored a market balancing two opposing forces: near-term bearish pressure from rising inventories and stronger port arrivals, versus medium-term support from revised surplus expectations and weather-linked risk to West African harvest conditions. With futures already off multi-week lows but inventories still elevated, investors are likely to remain sensitive to incremental updates in both physical availability and crop-development indicators.
What to watch next: Follow-up reporting on Ivory Coast harvest progression, additional revisions to 2026/27 surplus forecasts, and further guidance on El Niño development from meteorological agencies. In parallel, continued regional grindings data will help confirm whether the current mixed demand signals are broadening or narrowing heading into the next contract months.
