Cocoa prices fell sharply on Thursday, with July ICE NY cocoa (CCN26) dropping 4.28% and July ICE London cocoa #7 (CAN26) declining 4.49%, as the Ivory Coast raised its cocoa delivery projection for the 2025/26 season. The West African nation now expects output of 2.2 million metric tons (MMT), up from a prior estimate of 1.8–1.9 MMT, citing favorable weather conditions. A strengthening U.S. dollar, which reached a two-week high, added further downward pressure on cocoa futures.
Ivory Coast Output Revision and Supply Dynamics
The Ivory Coast, the world’s largest cocoa producer, revised its 2025/26 production estimate upward by roughly 15–20%, a significant shift that surprised markets. Cumulative port deliveries from October 1, 2025, through May 3, 2026, reached 1.57 MMT, up 0.6% year-over-year, indicating stable near-term supply. However, the revised full-season projection suggests a more abundant crop than previously anticipated, triggering a sell-off in futures.
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In contrast, Nigeria, the fifth-largest global producer, reported a 35% year-over-year drop in March cocoa exports to 18,052 MT. The country’s Cocoa Association projects a full-year 2025/26 output decline of 11% to 305,000 MT, citing aging trees and pest pressures. This divergence between top producers highlights the uneven supply arena across West Africa.
El Niño Risks and Crop Outlook
Despite the near-term bearish supply news, cocoa markets remain sensitive to weather risks. The U.S. National Oceanic and Atmospheric Administration (NOAA) estimates a 61% probability that El Niño conditions will develop between May and July 2026, with a one-in-four chance of a “Super El Niño.” Historically, El Niño brings warmer, drier conditions to West Africa, which can stress cocoa trees and reduce yields. Early surveys of the 2026/27 West African cocoa crop show below-average cherelle formation, signaling a potentially weak main harvest beginning in October.
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Drought conditions already blanket more than half of the Ivory Coast and about two-thirds of Ghana, according to the African Flood and Drought Monitor as of late March. Both countries have cut official farmer prices for the 2025/26 season—Ghana by nearly 30% and the Ivory Coast by 57% for the mid-crop harvest—which may discourage investment in tree maintenance and further constrain future supply.
Global Surplus Estimates and Demand Signals
Market forecasts for global cocoa balances have shifted. StoneX cut its 2026/27 global surplus estimate to 149,000 MT from 267,000 MT in January, citing El Niño-related crop risks. For 2025/26, StoneX reduced its surplus forecast to 247,000 MT from 287,000 MT. Rabobank similarly trimmed its 2025/26 surplus estimate to 250,000 MT in February.
Demand data presents a mixed picture. North American Q1 cocoa grindings fell 3.8% year-over-year to 106,087 MT, while European grindings dropped 7.8% to 325,895 MT—the lowest first-quarter level in 17 years. However, Asian grindings unexpectedly rose 5.2% to 223,503 MT, defying expectations of a decline. Consumer chocolate demand appears resilient: Hershey and Mondelez International reported better-than-expected earnings, though Circana data showed North American chocolate candy sales fell 1.3% in the 13 weeks ending March 22.
Broader Market Implications
The prolonged closure of the Strait of Hormuz continues to disrupt global cocoa supply chains by raising fertilizer costs, shipping rates, and insurance premiums, which ultimately increase import costs for cocoa buyers. ICE cocoa inventories reached a 20.5-month high of 2,668,548 bags last Thursday, signaling ample near-term stocks. The International Cocoa Organization (ICCO) raised its 2024/25 global surplus estimate to 75,000 MT in March, the first surplus in four years, with global production climbing 8.4% year-over-year to 4.7 MMT.
For traders and chocolate manufacturers, the key tension lies between short-term supply abundance from the Ivory Coast and the looming threat of El Niño-driven production losses in the 2026/27 season. The market is likely to remain volatile as these opposing forces play out over the coming months.
Conclusion
Thursday’s cocoa price slump reflects the market’s immediate reaction to higher Ivory Coast delivery projections, but the longer-term outlook remains clouded by weather risks, supply chain disruptions, and uneven global demand. Investors and industry participants should monitor El Niño developments, West African rainfall patterns, and quarterly grind data for clearer signals on price direction.
FAQs
Q1: Why did cocoa prices drop sharply on May 14, 2026?
The Ivory Coast raised its 2025/26 cocoa production estimate to 2.2 MMT, up from 1.8–1.9 MMT, signaling more abundant supply than expected. A stronger U.S. dollar also weighed on commodity prices.
Q2: How might El Niño affect cocoa production?
El Niño typically brings warmer, drier conditions to West Africa, which can stress cocoa trees and reduce yields. NOAA estimates a 61% probability of El Niño emerging by mid-2026, with potential impacts on the 2026/27 harvest.
Q3: Is global cocoa demand weakening?
Demand is mixed. North American and European Q1 cocoa grindings fell year-over-year, but Asian grindings rose. Chocolate makers like Hershey and Mondelez reported steady consumer demand despite high prices, though North American chocolate candy sales slipped 1.3%.
