Cocoa prices remain under pressure as rising exchange inventories and signs of softer chocolate demand outweigh longer-term concerns over West African production. The market is balancing abundant near-term supplies from the Ivory Coast and Ghana against growing risks to the 2026/27 crop from weather, disease and weaker early pod development.

December ICE NY cocoa is down 118 points, or 2.07%, while December ICE London cocoa #7 is down 57 points, or 1.35%. The decline follows another sharp session of selling, with rising ICE inventories reinforcing the bearish near-term supply picture.

At the same time, the medium-term outlook is becoming more complicated. Early assessments of the new West African crop point to weaker production, while an increasingly strong El Niño could create additional stress on cocoa trees and yields.

Market Snapshot

Market Factor	Current Outlook
December NY Cocoa	-118 points, -2.07%
December London Cocoa #7	-57 points, -1.35%
ICE Cocoa Inventories	3,549,555 bags
Inventory Trend	2.25-year high
Ivory Coast 2025/26 Harvest	2.06 MMT, +30% y/y
Ivory Coast Shipments	2.18 MMT, +19.8% y/y
Ivory Coast 2026/27 Early Crop Estimate	1.8 MMT
Ghana 2026/27 Crop Estimate	650,000 MT, -13% y/y
Ghana COCOBOD Risk Estimate	450,000–550,000 MT
StoneX 2026/27 Global Balance	25,000 MT surplus
Transgraph 2026/27 Global Balance	80,000 MT surplus
European Q2 Grindings	-4.6% y/y
North American Q2 Grindings	+7.7% y/y
Asian Q2 Grindings	+25% y/y

Price Action and Market Structure

Cocoa futures are under renewed selling pressure after prices recently attempted to recover on concerns over excessive rainfall and logistical disruption in the Ivory Coast.

The latest decline has shifted attention back toward the physical supply picture, particularly the sharp increase in ICE inventories.

Exchange stocks have climbed to 3,549,555 bags, the highest level in approximately 2.25 years. Rising certified inventories indicate that nearby physical availability is currently much more comfortable than during the tighter periods that previously supported the market.

The immediate technical and fundamental picture therefore remains bearish, although the longer-term production outlook is considerably less comfortable.

ICE Inventories Signal Comfortable Near-Term Supply

The strongest bearish factor currently facing cocoa is the rise in ICE inventories.

At more than 3.5 million bags, certified stocks are now at a 2.25-year high. The increase suggests that physical cocoa availability is improving and that the market does not currently face the type of immediate shortage that previously supported extreme prices.

Higher inventories also give chocolate manufacturers and processors greater flexibility in sourcing nearby beans.

Unless inventory growth begins to slow, it may remain difficult for futures to establish a sustained upside trend in the short term.

Ivory Coast Production Remains Strong

The Ivory Coast remains the world’s largest cocoa producer and is currently providing significant supply to the global market.

Cumulative shipments to ports reached approximately 2.18 MMT, up 19.8% year over year.

The country’s cocoa regulator also reported that approximately 2.06 MMT was harvested between June 2025 and June 2026, representing a substantial 30% increase from the previous season’s 1.58 MMT.

These figures demonstrate why the market is currently facing a much more comfortable supply environment.

The important question is whether this strong production performance can be repeated during the new 2026/27 season.

Early Ivory Coast Crop Signals Are Less Comfortable

The outlook for the new crop is considerably weaker.

Early field surveys indicate below-average cherelle formation, poor pod development and weaker crop potential. Initial assessments place the 2026/27 Ivory Coast crop around 1.8 MMT, approximately 18% below the estimated 2.2 MMT produced during 2025/26.

That would represent a significant reduction in production.

Weather is also becoming an important quality concern. Cloudy conditions and limited sunshine across the Ivory Coast and Ghana have increased the risk of black pod disease, potentially reducing both yields and bean quality.

This creates an important contrast for the market: current supplies are abundant, but the forward crop outlook is deteriorating.

Ghana Supply Outlook

Ghana is facing an even more uncertain production outlook.

The Ghana Cocoa Board estimates the 2026/27 crop at approximately 650,000 MT, down 13% from the 750,000 MT produced during 2025/26.

COCOBOD has provided an even more cautious scenario, projecting production could fall to between 450,000 MT and 550,000 MT.

The decline reflects the combined impact of swollen shoot disease, aging cocoa farms and potentially adverse El Niño weather.

However, current-season production remains strong. Ghana’s cocoa board reported approximately 750,000 MT harvested during the 2025/26 season, up 25.6% from 597,000 MT in 2024/25.

The contrast between current production and next-season expectations is likely to become increasingly important for futures pricing.

El Niño Creates Medium-Term Upside Risk

Weather remains one of the biggest potential bullish factors.

The US Climate Prediction Center has indicated that the El Niño pattern emerging across the equatorial Pacific could become one of the strongest in more than 75 years.

El Niño typically produces warmer and drier conditions across parts of West Africa. For cocoa producers, this can reduce soil moisture, stress trees and negatively affect yields.

If the developing weather pattern becomes more severe, the current bearish inventory situation could eventually give way to tighter physical supply.

This is one of the main reasons the medium-term cocoa outlook cannot be considered outright bearish despite the current pressure.

Global Cocoa Balance

Private estimates point toward a relatively small global surplus for 2026/27.

StoneX has reduced its projected global cocoa surplus to only 25,000 MT, compared with its earlier estimate of 149,000 MT.

Transgraph Consulting has projected an 80,000 MT global surplus for 2026/27, down substantially from its estimated 415,000 MT surplus for 2025/26.

The decline is primarily attributed to lower expected production.

Transgraph expects global cocoa production to fall to approximately 4.87 MMT in 2026/27 from 5.11 MMT in 2025/26.

A surplus of only 25,000–80,000 MT would leave the market considerably more vulnerable to production disruptions than the current inventory picture might suggest.

Cocoa Demand Remains Mixed

Demand signals are inconsistent across major processing regions.

European cocoa grindings fell 4.6% year over year to 316,366 MT in Q2, significantly weaker than the expected 1.5% decline and the lowest Q2 level in six years.

The European numbers reinforce concerns that high cocoa costs have damaged chocolate demand and forced manufacturers to adjust pricing and purchasing strategies.

North America provided a more positive signal. Q2 cocoa grindings rose 7.7% year over year to 109,659 MT, significantly outperforming expectations for a 1% decline.

Asian demand was even stronger, with Q2 cocoa grindings increasing 25% year over year to 224,646 MT, well above expectations for approximately 9% growth.

The regional divergence means global demand cannot yet be characterized as uniformly weak.

Chocolate Pricing and Consumer Demand

The demand outlook has nevertheless become a significant bearish consideration.

Cargill, the world’s second-largest cocoa processor, reported mark-to-market losses on cocoa for the quarter ending August 31. The development suggests that processors are struggling to pass elevated raw-material costs through to customers.

Lindt & Sprüngli has also reduced chocolate prices for a second time this year and lowered its 2026 organic sales-growth outlook to 0%–2% from 4%–6%, citing subdued consumer sentiment.

These developments indicate that high cocoa prices are beginning to influence the downstream chocolate market.

If manufacturers continue reducing prices while consumers remain cautious, demand could weaken further.

Bullish Scenario

Cocoa prices could regain upside momentum if:

• ICE inventories begin to decline from current highs.
• Early Ivory Coast crop estimates continue to deteriorate.
• Ghana production falls toward the lower end of COCOBOD’s 450,000–550,000 MT range.
• El Niño produces hotter and drier conditions across West Africa.
• Black pod disease spreads further.
• Bean quality deteriorates.
• Global production falls toward or below current private estimates.
• Asian and North American grindings remain strong.
• The global surplus disappears and the market moves into deficit.

The biggest bullish argument is that the current inventory surplus could prove temporary if the 2026/27 West African crop underperforms.

Bearish Scenario

The bearish case remains strongest in the near term if:

• ICE inventories continue rising.
• Ivory Coast shipments remain well above last year’s levels.
• The current crop continues to produce strong volumes.
• Ghana maintains production near current-season levels.
• European chocolate demand remains weak.
• High cocoa prices continue to pressure consumer spending.
• Processors reduce purchases because of elevated inventories.
• El Niño produces less damage than currently feared.
• Global production remains sufficient to maintain a surplus.

A sustained increase in exchange inventories would make it increasingly difficult for the market to justify a significant supply premium.

Cocoa Price Outlook

The short-term bias remains bearish, particularly while ICE inventories continue rising and demand indicators remain mixed.

However, the medium-term picture is more balanced.

Current inventories reflect the strong 2025/26 production cycle, while the market is increasingly looking ahead to a potentially weaker 2026/27 crop.

The critical question is whether declining future production will arrive quickly enough to offset current inventory growth.

If inventories continue climbing, cocoa could remain under pressure. If inventory growth stalls while West African crop estimates fall, the market could begin rebuilding a risk premium.

Supply Outlook

The supply outlook is divided between a strong current crop and a potentially weaker next season.

The Ivory Coast and Ghana have delivered strong production during the current marketing cycle, supporting higher inventories and increasing nearby availability.

However, early indicators for the new crop are significantly less encouraging.

Lower cherelle formation, poor pod development, disease risk, aging Ghanaian farms and potential El Niño weather disruption all point toward greater production uncertainty.

The next several months will therefore be critical for determining whether the current inventory surplus is temporary.

Demand Outlook

Demand remains the principal bearish uncertainty.

European processing is weak, while Cargill’s losses and Lindt’s reduced sales outlook suggest that high cocoa costs are affecting the downstream market.

North American and Asian grinding data provide important counterweights, particularly Asia’s 25% annual increase.

The global demand picture is therefore mixed rather than uniformly weak.

A sustained recovery in Asian and North American processing could help absorb current inventories, while continued weakness in Europe would limit the pace of global demand growth.

Louis Roche Analysis

Cocoa is currently caught between strong near-term physical supply and deteriorating forward production prospects.

The rise in ICE inventories to more than 3.5 million bags is the clearest bearish signal in the market. It tells us that the immediate supply situation is comfortable, while the strong Ivory Coast harvest and elevated shipments reinforce that conclusion.

However, I would be cautious about extrapolating current supply conditions too far into 2027.

The early indicators for the new Ivory Coast crop are considerably weaker. Ghana is also facing structural production problems, while the potential impact of a strong El Niño introduces another layer of uncertainty.

The demand side is equally important. European grindings are weak and major chocolate manufacturers are clearly facing consumer resistance to higher prices. But the strength of Asian and North American processing shows that demand has not collapsed globally.

My view is therefore bearish in the near term but increasingly balanced over the medium term.

If ICE inventories continue to rise, prices can remain under pressure and potentially retest deeper support. But if inventory growth slows at the same time that Ivory Coast and Ghana crop estimates are revised lower, the market could quickly transition from a surplus narrative to a supply-risk narrative.

The key signal I will be watching is not simply the current inventory level, but the rate at which inventories are changing relative to the outlook for the 2026/27 West African crop.

Coming Sessions

The cocoa market will remain focused on:

1. ICE certified inventories — continued increases would reinforce the bearish trend.
2. Ivory Coast shipments — strong export flows would keep nearby supply comfortable.
3. 2026/27 Ivory Coast crop development — early pod formation and weather will be critical.
4. Ghana production forecasts — further reductions would provide support.
5. El Niño development — the potential for hotter and drier West African conditions remains a major risk.
6. Black pod disease — disease progression could reduce both production and quality.
7. Global cocoa grindings — particularly whether European demand stabilizes.
8. Chocolate manufacturer pricing — further price reductions could indicate weakening consumer demand.
9. ICE inventory growth — the most important immediate physical-market indicator.

Today Markets View

Cocoa remains under near-term bearish pressure, with rising ICE inventories and mixed demand providing the dominant market signals.

However, the forward supply picture is becoming less comfortable as early 2026/27 crop assessments point toward lower production in the Ivory Coast and Ghana.

Today Markets maintains a cautious bearish short-term view, while recognizing that the medium-term balance could shift rapidly if West African production estimates continue to fall or El Niño produces significant crop damage.

Currency Hedger View

Currency movements remain an important secondary factor for cocoa because West African producers and exporters operate within global commodity markets priced in major currencies.

The direction of the US dollar can influence dollar-denominated cocoa futures, while currency movements across producing and consuming economies can affect export competitiveness, producer revenues and the cost of physical cocoa.

Currency Hedger monitors foreign exchange markets alongside broader commodity and macroeconomic conditions, helping businesses assess and manage their international currency exposure.

Open a Currency Hedger Account: Open a Currency Hedger Account

Visit Currency Hedger: Currency Hedger

Contributor

Louis Roche – Today Markets

Market analysis prepared for Today Markets. For informational purposes only and not intended as investment, trading, financial or commodity advice.