Cocoa futures in New York and London fell sharply on Monday, reversing an early advance and closing near three-week lows as fresh shipment and inventory data pointed to tighter near-term price pressure easing. September ICE New York cocoa closed down 276 points, or 5.13%, while September ICE London cocoa #7 finished lower by 188 points, or 4.68%.
Key takeaways
- Price move: September New York cocoa fell 5.13% and September London cocoa #7 dropped 4.68%.
- Catalyst: Ivory Coast shipment data and an increase in ICE warehouse stocks weighed on the market.
- Supply signal: Cumulative cocoa deliveries to Ivory Coast ports rose year over year.
- Demand read-through: Mixed grindings data in Europe, North America, and Asia provided less consistent support.
- Implication: Even with longer-run concerns about the 2026/27 crop, near-term supply dynamics dominated sentiment.
What drove the move
The selloff was fueled by indicators that global cocoa supply is building more than traders had priced. Monday’s cumulative data from the Ivory Coast showed farmers shipped 2.11 million metric tons of cocoa to ports during the current marketing year (October 1, 2025, through July 26, 2026), up 21% versus the same period a year earlier. Separately, Bloomberg reported that Nigerian cocoa exports rose 30% year over year in June to 18,922 MT.
Inventory trends also reinforced the bearish tone. According to the ICE inventory report, cocoa stocks rose to a two-year high of 3,361,752 bags on Monday, increasing the market’s sense of availability.
Market reaction and demand signals
While supply indicators pushed prices lower, demand signals were mixed across regions. According to the European Cocoa Association, Q2 European cocoa grindings fell 4.6% to 316,366 MT, a decline larger than the 1.5% year-over-year drop that was expected and the weakest Q2 level in six years. That contraction added to the sense that consumption in Europe is not currently providing a strong cushion.
In contrast, demand in other areas showed resilience. The National Confectioners Association reported Q2 North American cocoa grindings rose 7.7% year over year to 109,659 MT, exceeding expectations for a 1% decline. The Cocoa Association of Asia also indicated improvement, with Q2 Asian grindings up 25% year over year to 224,646 MT, well above forecasts for about a 9% increase.
With regional consumption diverging, traders appeared to prioritize the stronger supply and inventory narrative over the patchwork demand data.
Crop outlook and macro weather risks
Despite Monday’s decline, the market continues to have medium-term support tied to expectations for the next Ivory Coast crop cycle. Early surveys of the 2026/27 crop pointed to below-average cherelle formation, a factor that often precedes weaker development for the main harvest beginning in September. However, Expana’s senior manager said Thursday that more recent surveys suggest a substantial improvement in cocoa pod counts compared with early assessments, tempering the earlier concern.
Early crop estimates cited in the report suggest a potential season starting in September of 1.8 million metric tons, down 18% from roughly 2.2 million metric tons in 2025/26. Those figures matter because they help frame whether the market moves toward a tighter balance later in the year, even if inventories look comfortable now.
Forecasts for the global surplus also influence sentiment. Transgraph Consulting projected that the 2026-2027 global cocoa surplus would shrink to 80,000 metric tons from 415,000 MT in 2025-2026, primarily on an expected production decline to 4.87 million metric tons from 5.11 million metric tons. StoneX, according to the report, cut its 2026/27 surplus estimate to 149,000 MT from a January forecast of 267,000 MT, citing risks to the West African crop from an anticipated El Niño.
Weather expectations remain a key uncertainty. On July 8, the U.S. Climate Prediction Center said the El Niño pattern emerging across the equatorial Pacific last month is likely to become one of the strongest in more than 75 years. El Niño typically brings warmer and drier conditions to West Africa, which can reduce soil moisture and stress cocoa trees, potentially lowering yields.
Bigger picture: supply from major origins
Outside Ivory Coast, Nigeria is another focal point for supply expectations. The report noted that Nigeria’s Cocoa Association projects Nigerian cocoa production in 2025/26 will fall 11% year over year to 305,000 MT, compared with a projected 344,000 MT for 2024/25. That supply risk supports the case for firmer prices later, but Monday’s trading indicates investors were still reacting to nearer-term data and inventory levels.
Traders will likely watch how additional shipment figures from key origins evolve and whether ICE inventories continue to rise or stabilize. With the crop narrative still being shaped by survey updates and weather forecasts around El Niño, investors may also monitor the next set of production and grindings data, alongside any fresh guidance from major processors and trade bodies for the coming quarter.
