Cocoa futures posted sharp gains on Wednesday, extending Monday’s rally to fresh six-week highs. July ICE New York cocoa rose to 14 points higher on the day, while July ICE London cocoa #7 added 23 points, as traders priced in tighter near-term supply risks tied to heavy weather in the Ivory Coast.
Prices gained momentum amid reports of flooding and road disruptions across key growing regions, which have limited farmers’ access to farms and ports. The weather comes with an added agronomic risk: prolonged excess moisture can increase the likelihood of brown rot, a disease that threatens tree health and harvest volumes.
Key takeaways
- Price move: July ICE New York cocoa and July ICE London cocoa #7 both rose on the day to their strongest levels in about six weeks.
- Catalyst: Heavy rains in the Ivory Coast are disrupting farm-to-port logistics and raising disease risk in cocoa-growing areas.
- Implication: The market is leaning on weather-driven yield concerns, even as broader supply indicators point to inventories remaining elevated.
- Offsetting factors: A stronger U.S. dollar limited gains, and inventory levels near recent highs remain a bearish counterweight.
- Demand watch: Recent grindings data show weakness in some regions, keeping demand concerns in focus.
What drove cocoa higher
Traders cited a weather-heavy narrative centered on the Ivory Coast. According to market coverage, persistent rainfall has flooded roads and constrained farmers’ ability to reach farms and transport beans to ports. Beyond logistics, excessive moisture also increases the probability of brown rot on cocoa trees, which can reduce yields and jeopardize the harvest.
Although the cocoa complex pushed to new highs, gains were tempered as the U.S. dollar strengthened. Data referenced in the report showed the dollar index rallied to a 13-month high, a move that typically weighs on commodities priced in U.S. dollars by making them more expensive for holders of other currencies.
Medium-term support from El Niño risk
Beyond immediate flooding, the forward weather outlook continues to underpin sentiment. On June 10, Japan’s Meteorological Agency confirmed an El Niño pattern had formed across the equatorial Pacific. Historically, an El Niño tends to bring warmer and drier conditions to West Africa, which can stress cocoa trees by reducing soil moisture and lowering yields.
According to NOAA estimates cited in the report, there is a 67% chance of a “Super El Niño” this year—one of the strongest on record. The report also noted that early surveys for the 2026/27 West African cocoa crop point to below-average cherelle formation, a signal associated with a weaker main harvest that starts in October.
Competing signals: inventories and demand data
While weather risks are supportive, the balance-sheet picture has not fully turned bullish. Cocoa inventories on ICE were reported to have climbed to a 1.75-year high of 2,929,074 bags on June 5, and stood just below that level at 2,914,908 bags on Monday. Higher stock levels are generally considered bearish because they can buffer shortages and soften the immediate price impact of crop stress.
Demand indicators also remain mixed. The report referenced National Confectioners Association data showing North American Q1 cocoa grindings fell 3.8% year over year to 106,087 metric tons. In Europe, the European Cocoa Association reported Q1 European cocoa grindings declined 7.8% year over year to 325,895 metric tons, missing expectations for a smaller contraction and marking the weakest Q1 in 17 years, according to the coverage.
By contrast, the Cocoa Association of Asia reported that Q1 Asian cocoa grindings rose 5.2% year over year to 223,503 metric tons, beating expectations for a decline. Taken together, the regional pattern suggests demand is not uniformly weakening, but European and North American softness remains a key concern for price bulls.
Supply drivers to monitor
Supply risk is also being balanced by signs of abundant shipments earlier in the season. According to figures cited from the Ivory Coast, cocoa reaching ports in the current marketing year totaled 1.95 million metric tons through June 7, up 18.9% from the same period a year earlier.
The report also noted that the Ivory Coast said its 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. In addition, it referenced forecast cuts and policy actions that could affect farmer output and incentives: Ghana cut the official price paid to cocoa farmers by nearly 30% for the 2025/26 growing season, while the Ivory Coast announced a 57% reduction in farmer pay effective for its mid-crop harvest starting in March. With the two countries producing more than half of global cocoa, such adjustments can influence future supply.
Outside the Ivory Coast, Nigeria—described as the world’s fifth-largest cocoa producer—was another supportive factor. Bloomberg reporting cited in the article said Nigerian cocoa exports in April fell 20% year over year to 14,921 metric tons. The report further referenced Nigeria’s Cocoa Association projection that production in 2025/26 would decline 11% year over year to 305,000 metric tons.
Bigger picture for the cocoa market
Several forces are pulling the market in different directions. Heavy rains and El Niño-linked yield stress risks are supportive, while elevated inventories and pockets of demand weakness limit upside. Separately, the reopening of the Strait of Hormuz is expected to ease global shipping disruptions and reduce costs for importers, which could be a modest headwind to prices.
For a clearer read on where prices may be headed, investors will likely focus next on updated West African weather conditions and any revisions to crop forecasts for the 2026/27 harvest cycle. Monitoring follow-up data on grinding trends and inventory movements will also be important, particularly as the market tries to reconcile near-term supply disruptions with a still-stocked futures backdrop.
