Cocoa Prices Surge Amid West African Weather Risks

Cocoa markets have witnessed a notable price increase, driven by adverse weather reports emanating from key production regions in West Africa. September ICE New York cocoa (CCU26) futures contracts climbed by 5.43%, reaching a six-month high, while September ICE London cocoa #7 (CAU26) contracts advanced by 5.72%, hitting a seven-month peak. This upward movement is primarily attributed to intensifying global supply concerns as heavy rains in Côte d'Ivoire and Ghana have impeded access to farms and ports.

Cocoa prices have experienced a sharp rally over the past three weeks. Torrential rainfall in Côte d'Ivoire and Ghana has flooded roads, cutting off farmers' access to their plantations and ports, thereby threatening global supplies. Excessive moisture also heightens the risk of brown rot and black pod disease on cocoa trees, reducing yields and jeopardizing the upcoming harvest. Furthermore, the Japan Meteorological Agency's confirmation on June 10 of an El Niño weather pattern forming across the equatorial Pacific is providing medium-term price support. El Niño typically brings warmer, drier conditions to West Africa, diminishing soil moisture, stressing cocoa trees, and lowering yields.

The U.S. National Oceanic and Atmospheric Administration (NOAA) estimates a 67% chance of a “Super El Niño” this year, potentially one of the strongest ever recorded. Early surveys of the 2026/27 Côte d'Ivoire cocoa crop reveal below-average cherelle (young cocoa pod) formation on cocoa trees, signaling a weak outlook for the main harvest scheduled to begin in September. Initial crop assessments point to poor pod development, with an average estimate of 1.8 million metric tons (MMT) for the season starting in September, an 18% decrease from approximately 2.2 MMT in 2025/26.

These developments are exerting pressure on chocolate manufacturers and other cocoa-consuming industries. Rising cocoa costs could translate into higher prices for consumers of chocolate and cocoa-based products. However, some conflicting signals are present in the market. ICE cocoa inventories reached a nearly two-year high of 3,082,154 bags on Tuesday, which could exert some downward pressure on prices. Cumulative data from Côte d'Ivoire indicates that farmers shipped 2.04 MMT of cocoa to ports through June 28, 2026, marking a 20% increase year-over-year.

Expectations for the global cocoa surplus are also being revised. StoneX cut its 2026/27 global cocoa surplus estimate to 149,000 MT from a January forecast of 267,000 MT, and also reduced its 2025/26 surplus forecast to 247,000 MT from 287,000 MT. This suggests that while a surplus is still anticipated, it is projected to be significantly smaller. Meanwhile, Q1 European cocoa grindings fell by 7.8% year-over-year, reaching their lowest Q1 figure in 17 years, and North American Q1 grindings decreased by 3.8%. Conversely, Q1 Asian cocoa grindings rose by 5.2%, presenting a mixed demand picture.

Analysts anticipate that cocoa price volatility will remain elevated in the coming period. July field surveys are expected to play a critical role in determining the final size of the cocoa crop. Weather conditions in West Africa and the progression of El Niño will continue to be the market's primary focus. Traders are closely monitoring how much the new harvest can replenish inventories and the extent to which El Niño concerns will intensify.