Cocoa futures fell on Thursday, extending a two-week slide as traders weighed reports of tighter near-term demand against evidence of ample supply. September cocoa on ICE New York finished lower, while September cocoa on ICE London also closed down sharply, leaving prices just above Tuesday’s 3.5-week lows.
Market participants cited improving shipping and export activity from West Africa alongside a build-up in exchange inventories. That supply backdrop has offset intermittent signs of weaker crop prospects and improving demand signals from some regions, keeping the balance sheet-focused narrative in control of prices.
Key takeaways
- Price move: September ICE New York cocoa closed down 1.41% and September ICE London cocoa fell 2.33% on Thursday.
- Catalyst: Thicker supply signals, including higher Ivory Coast shipments and a rise in ICE inventories, pressured prices.
- Demand signals mixed: European grindings fell, but North American and Asian grindings showed growth.
- Crop and weather support remains in play: Early surveys point to weaker pod development, though more recent checks suggest improvement.
- Implication: Traders are likely to keep shifting focus between inventory levels and evolving West African production forecasts.
What drove the move
Pressure on cocoa prices was tied to supply momentum and inventory trends. Data from the Ivory Coast covering the current marketing year (October 1, 2025, through July 26, 2026) showed farmers shipped 2.11 million metric tons to ports, up 21% versus the same period a year earlier.
Export updates also reinforced the supply theme. Bloomberg reported that Nigerian cocoa exports increased in June, rising 30% year over year to 18,922 metric tons.
Alongside those flow indicators, exchange stock levels moved higher. ICE cocoa inventories rose to a two-year high of 3,375,119 bags on Tuesday, a factor traders typically weigh heavily when near-term supply appears comfortable.
How demand data shaped sentiment
Demand signals were mixed across regions, which helped explain why sellers maintained control despite intermittent offsets in consumption figures.
- Europe: The European Cocoa Association reported that Q2 European cocoa grindings fell 4.6% to 316,366 metric tons, worse than the 1.5% year-over-year decline expected and the lowest Q2 level in six years.
- North America: The National Confectioners Association said Q2 North American grindings rose 7.7% year over year to 109,659 metric tons, coming in above an expectation for a 1% decline.
- Asia: The Cocoa Association of Asia reported Q2 Asian grindings climbed 25% year over year to 224,646 metric tons, exceeding expectations of 9% growth.
With European processing weakening while other regions grew, market participants appeared to treat the demand picture as uneven rather than uniformly supportive.
Forecasts and crop signals: support versus uncertainty
While inventory and shipment data weighed on prices, forecasts for the 2026/27 season provided at least some underlying support. StoneX cut its 2026/27 global cocoa surplus estimate to 25,000 metric tons from a prior forecast of 149,000 metric tons, pointing to risks to the West African crop tied to an expected El Niño.
That more constructive surplus outlook is also consistent with broader market projections for tighter balances. Transgraph Consulting forecast that the global cocoa surplus in 2026-2027 would shrink to 80,000 metric tons from 415,000 metric tons in 2025-2026, primarily due to production declining to 4.87 million metric tons from 5.11 million metric tons.
Crop surveys also injected volatility into the narrative. Early surveys of the 2026/27 Ivory Coast cocoa crop indicated below-average cherelle formation, a sign often associated with weaker yield potential for the main harvest beginning in September. One early estimate put the season at 1.8 million metric tons, down 18% from around 2.2 million metric tons in 2025/26.
However, commentary from Expana suggested Thursday that later surveys show a substantial improvement in cocoa pod counts compared with the initial assessments. That adjustment matters because it can influence how quickly the market reprices the risk premium embedded in weather- and crop-related expectations.
Bigger picture: El Niño risk and production outlook
Medium-term support for cocoa prices also came from weather risk. According to the U.S. Climate Prediction Center, the El Niño pattern developing across the equatorial Pacific is likely to be among the strongest in more than 75 years. El Niño conditions typically bring warmer, drier weather to West Africa, which can reduce soil moisture and stress cocoa trees—potentially lowering yields.
Regional production expectations added another layer. Nigeria’s Cocoa Association projected Nigerian cocoa production for 2025/26 to fall 11% year over year to 305,000 metric tons, down from a projected 344,000 metric tons for 2024/25. With Nigeria positioned as the world’s fifth-largest cocoa producer, any shift in expected supply can tighten the market’s perceived balance.
Even with these supportive threads, Thursday’s price action suggests that traders prioritized current availability—shipments and inventories—over longer-dated crop risk, especially after Tuesday’s inventory surge.
Going forward, investors will likely watch whether Ivory Coast shipment momentum continues at an elevated pace and how ICE inventory levels evolve after the two-year high. The market is also likely to turn attention to updates on the 2026/27 West African crop, alongside weather developments tied to El Niño, as well as further regional processing data that could clarify demand trends across Europe, North America, and Asia.
