Cocoa Prices Soar on Mounting Ghana Production Concerns

Cocoa prices experienced a significant rally on Friday, driven by intensifying concerns over Ghana's cocoa production outlook. September ICE NY cocoa (CCU26) closed up +285 points (+5.58%), while September ICE London cocoa #7 (CAU26) gained +201 points (+5.28%). New York cocoa futures climbed 7.4% to $5,490 per ton, and London cocoa futures rose 6.9% to £4,074 per metric ton. This sharp increase was primarily triggered by dismal production forecasts from Ghana, the world's second-largest cocoa producer.

Ghana's cocoa regulator, COCOBOD, projects the nation's 2026/27 cocoa production could fall to a range of 450,000 MT to 550,000 MT, a considerable drop from the 750,000 MT projected for the 2025/26 season. This represents a decline of at least 16%. The anticipated reduction is attributed to a combination of factors, including the widespread cocoa swollen shoot disease, the prevalence of aging cocoa farms, and the likely adverse weather conditions associated with the El Niño phenomenon. El Niño typically brings warmer, drier conditions to West Africa, which can deplete soil moisture, stress cocoa trees, and ultimately lower yields. Furthermore, unusually heavy rainfall in May and June 2026 has increased the risk of brown rot and black pod diseases, further dampening yield prospects. COCOBOD has initiated measures to mitigate these losses, including the rehabilitation of infected farms, enhanced pest control programs, and the reintroduction of a nationwide free fertilizer distribution scheme.

These developments have significant implications for the global cocoa supply. Beyond Ghana, Côte d'Ivoire, the world's largest cocoa producer, is also anticipating a smaller harvest, and Nigeria's production is expected to decline as well. Such negative supply-side expectations have led market analysts to revise down their global cocoa surplus forecasts. Transgraph Consulting projects the global cocoa surplus for 2026-2027 to shrink to 80,000 metric tons from 415,000 MT in 2025-2026. Similarly, StoneX has cut its 2026/27 global cocoa surplus estimate from 149,000 MT to a mere 25,000 MT.

Cocoa prices had been under pressure for the past two weeks, hitting four-week lows on Tuesday amid demand concerns. However, the fresh production worries from Ghana reversed this trend. Potential disruptions to global shipping through the Strait of Hormuz and the Red Sea due to the US-Iran conflict also contribute to concerns about global cocoa supplies, providing additional support to prices. On the demand side, second-quarter cocoa grinding data presented a mixed picture, with European grindings declining, while North American and Asian grindings showed unexpected increases.

In a broader economic and political context, West Africa accounts for approximately 70% of the world's cocoa supply, making any production issues in the region critical for the global chocolate industry. The proliferation of illegal gold mining activities, known locally as 'galamsey', in Ghana is further exacerbating the problem by converting cocoa farms into mining sites, thereby reducing cultivable land and eroding long-term production capacity. Moreover, delays in farmer payments and working capital deficits for Licensed Buying Companies are causing systemic failures in the supply chain. These structural challenges are deepening Ghana's cocoa sector woes, and Ecuador is now projected to overtake Ghana as the world's second-largest cocoa producer.

Market analysts anticipate continued volatility in cocoa prices in the coming period. With global supply expected to remain tight due to adverse weather and disease risks in West Africa, the strengthening El Niño pattern could provide medium-term support for prices. While some recent surveys indicate an improvement in pod counts in Ivory Coast, the overall expectation points towards persistent supply deficits. Chocolate manufacturers and traders will continue to reassess their supply chain strategies in this uncertain environment.