Cocoa futures extended their week-long decline on Monday, with July ICE NY cocoa (CCN26) falling 5.6% and July London cocoa (CAN26) dropping 6.5% to reach two-week lows. The selloff comes as the global supply outlook improves, driven by a significantly higher production estimate from Ivory Coast, the world’s top cocoa producer.
Ivory Coast Lifts Supply Forecast
Last Thursday, the Ivory Coast government raised its cocoa delivery estimate for the 2025/26 season to 2.2 million metric tons, up sharply from a prior projection of 1.8–1.9 million metric tons, citing favorable weather conditions. Cumulative data through May 17 shows farmers have shipped 1.61 million metric tons to ports since October 1, a 1.9% increase year-over-year.
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Meanwhile, ICE-monitored cocoa inventories reached a 1.75-year high of 2,668,548 bags on May 7, reinforcing the near-term supply glut narrative. These developments have reversed the bullish momentum that pushed prices to 3.75-month highs just last week.
El Niño Threat Looms Over 2026/27 Crop
Despite the current abundance, the market remains wary of longer-term risks. The U.S. National Oceanic and Atmospheric Administration (NOAA) now estimates an 82% probability that El Niño conditions will emerge between May and July and persist through year-end, with a 67% chance of a ‘Super El Niño.’ Warmer, drier conditions in West Africa could damage the 2026/27 main crop, which begins harvesting in October.
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Early surveys already show below-average cherelle formation on cocoa trees in the region, signaling potential production weakness. StoneX recently cut its 2026/27 global cocoa surplus estimate to 149,000 metric tons, down from 267,000 metric tons in January, citing El Niño risks.
Demand Picture Mixed
Consumer demand for chocolate remains a bright spot. Hershey and Mondelez International reported better-than-expected earnings, suggesting steady consumer appetite despite elevated prices. However, Circana data shows North American chocolate candy sales fell 1.3% in the 13 weeks ending March 22.
Grind data tells a more nuanced story. North American Q1 cocoa grindings fell 3.8% year-over-year, while European grindings dropped 7.8%—the weakest first quarter in 17 years. In contrast, Asian grindings unexpectedly rose 5.2%, defying expectations of a decline.
Geopolitical and Logistical Headwinds
The prolonged closure of the Strait of Hormuz continues to disrupt global cocoa supply chains by raising fertilizer costs, shipping rates, and insurance premiums—all of which increase import costs for cocoa buyers. Nigerian cocoa exports also fell 35% year-over-year in March, with the country’s Cocoa Association projecting an 11% production decline for 2025/26.
Conclusion
The cocoa market is caught between near-term abundance and long-term uncertainty. While improved supplies from Ivory Coast and high inventories are weighing on prices, the looming El Niño threat, mixed demand signals, and logistical disruptions suggest volatility will persist. Traders will closely monitor weather developments in West Africa and upcoming grind data for clearer direction.
FAQs
Q1: Why are cocoa prices falling now?
Prices are declining because Ivory Coast raised its 2025/26 production estimate to 2.2 million metric tons, and ICE cocoa inventories hit a 1.75-year high, signaling ample near-term supply.
Q2: Could El Niño still push cocoa prices higher?
Yes. NOAA forecasts an 82% chance of El Niño by mid-2026, which could dry conditions in West Africa and damage the 2026/27 main crop, potentially tightening supply later.
Q3: Is global demand for cocoa and chocolate weakening?
The picture is mixed. North American and European cocoa grindings fell in Q1, but Asian grindings rose. Chocolate makers like Hershey and Mondelez reported steady consumer demand, though North American chocolate sales slipped slightly.
