Cocoa futures surged for a second straight session on Monday, with September contracts on ICE New York and ICE London climbing to two-week highs. September ICE US cocoa closed up 542 points (or 10.04%) to end the session higher, while September ICE London cocoa #7 rose 391 points (or 9.75%) as traders focused on potential supply stress in West Africa and concerns around shipping disruptions.
Key takeaways
- Price move: September ICE NY cocoa and September ICE London cocoa #7 jumped sharply, each posting gains above 9%.
- Catalyst: The rally was linked to renewed worries about cocoa production in Ghana and broader disruption risks to global shipments.
- Supply vs. demand signals: Data showed strong Ivory Coast export movement, but inventory levels remain elevated, keeping the market balanced.
- Forward-looking drivers: Early crop assessments and weather forecasts continue to support the market for the 2026/27 season, even as some surveys suggest improvement.
- Implication: Prices appear sensitive to new information on West African crop conditions and logistics, while investors watch whether surplus estimates keep narrowing.
What drove the move
Monday’s sharp rally followed a positive carryover from Friday, as traders increasingly priced in the risk of tighter cocoa output from Ghana. According to Ghana’s cocoa regulator COCOBOD, the country’s 2026/27 production could fall to 450,000 to 550,000 metric tons versus a 750,000 metric tons projection for 2025/26. COCOBOD attributed the outlook to multiple headwinds, including swollen shoot disease, aging farms, and the risk of adverse weather associated with El Niño conditions.
Supply disruption fears added another layer of support. The article cited the near standstill of commercial shipping through key routes in the region, including the Strait of Hormuz and the Red Sea, amid the US-Iran conflict. Any sustained logistics constraints can tighten the effective flow of commodities globally, especially for ingredients dependent on steady ocean freight.
Market reaction and competing signals
Despite Monday’s strength, the market is receiving mixed signals on near-term supply and demand. On the supply side, data from the Ivory Coast showed farmers shipped 2.11 million metric tons to ports in the current marketing year (from October 1, 2025, through August 2, 2026), representing a 20% year-over-year increase. Bloomberg also reported that Nigerian cocoa exports in June rose 30% year-over-year to 18,922 metric tons.
However, inventories have been a point of concern. The report noted that ICE cocoa inventories rose to a two-year high of 3,375,119 bags last Tuesday. Higher stock levels typically weigh on prices by signaling a more comfortable buffer, even when crop risks later in the season are building.
On demand, the picture also varied by region. According to the European Cocoa Association, Q2 European cocoa grindings fell 4.6% year over year to 316,366 metric tons, the steepest decline among recent comparisons and the lowest for Q2 in six years. In contrast, the National Confectioners Association reported that Q2 North American cocoa grindings unexpectedly rose 7.7% year over year to 109,659 metric tons. Separately, the Cocoa Association of Asia said Q2 Asian cocoa grindings increased 25% year over year to 224,646 metric tons, beating expectations.
Crop forecasts and weather risks
Looking ahead, multiple forward-looking factors continued to underpin the market for the 2026/27 season. The report pointed to early survey information from the Ivory Coast showing below-average cherelle formation, a sign that the main harvest—typically starting in September—could be weak. However, it also noted a senior manager at Expana said on July 23 that the most recent surveys showed a “substantial improvement” in cocoa pod counts compared with early assessments. Those early crop figures suggested an average estimate of 1.8 million metric tons for the September-start season, down 18% from roughly 2.2 million metric tons in 2025/26.
Beyond regional crop checks, analysts also trimmed expectations for global surplus. The report said StoneX reduced its 2026/27 global cocoa surplus estimate to 25,000 metric tons from an 149,000 metric ton forecast made in April, citing risks to the West African crop tied to an expected El Niño. Transgraph Consulting also projected that the 2026-2027 global cocoa surplus could shrink to 80,000 metric tons from 415,000 metric tons in 2025-2026, driven mainly by an expected production decline to 4.87 million metric tons in 2026-2027 from 5.11 million metric tons in 2025-2026.
Weather remains central to the debate over output. The report cited the US Climate Prediction Center’s view that the El Niño pattern developing across the equatorial Pacific is likely to be among the strongest in more than 75 years. El Niño typically brings warmer, drier conditions to West Africa, which can reduce soil moisture, stress cocoa trees, and weigh on yields.
Additional production risk exists in Nigeria as well. The article stated that Nigeria’s Cocoa Association projects 2025/26 output to decline 11% year over year to 305,000 metric tons, versus a 344,000 metric tons projection for 2024/25.
Bigger picture
Monday’s rally underscores how cocoa markets are balancing near-term availability signals—such as higher Ivory Coast shipments and elevated inventories—against the potential for a thinner supply outlook later in the cycle. With multiple forecasts now pointing to smaller surplus scenarios and weather-linked crop risks, prices can remain volatile as traders continuously reprice the probability of reduced harvest outcomes in West Africa.
Investors will likely focus next on updated crop survey results for the Ivory Coast and other key producing countries, any changes to El Niño expectations, and further data on shipments and grindings. Fresh supply-demand estimates for the 2026/27 season—along with continued developments in logistics—could drive additional swings in cocoa futures.
