September ICE NY cocoa (CCU26) closed down 1.10% on Thursday, while September ICE London cocoa (CAU26) fell 1.86% as traders squared positions ahead of the U.S. market holiday.
Pre-weekend liquidation drove selling pressure across both New York and London cocoa markets, with losses in London accelerating after the British pound climbed to a two-week high against the dollar.
A stronger pound directly undercuts the value of cocoa priced in sterling, adding additional downward pressure on London-traded contracts.
Rising warehouse stocks compounded the bearish mood, with ICE cocoa inventories climbing to a 1.75-year high of 3,017,796 bags on Wednesday.
Despite Thursday’s decline, cocoa prices have surged more than 20% over the past two weeks, reaching 5.5-month highs last Thursday on supply disruption fears from West Africa.
Heavy rains across the Ivory Coast and Ghana have flooded roads, cutting off farmers’ access to both farms and ports, raising serious concerns about global cocoa supply chains.
Accumulated June rainfall through last Monday had already approached levels typical of the entire month in both countries, while excessive moisture increases the risk of brown rot and black pod disease on cocoa trees.
A longer-term threat looms from El Niño, with Japan’s Meteorological Agency confirming on June 10 that an El Niño weather pattern had formed across the equatorial Pacific, typically bringing warmer, drier conditions to West Africa.
The U.S. National Oceanic and Atmospheric Administration estimates a 67% chance of a “Super El Niño” this year, potentially one of the strongest ever recorded, which could significantly stress cocoa trees and reduce yields.
Early surveys of the 2026/27 Ivory Coast cocoa crop show below-average cherelle formation on cocoa trees, with an average production estimate of 1.8 MMT for the season starting in September, down 18% from approximately 2.2 MMT in 2025/26.
On the demand side, the National Confectioners Association reported that North American Q1 cocoa grindings fell 3.8% year-over-year to 106,087 MT, while the European Cocoa Association reported Q1 European grindings fell 7.8% year-over-year to 325,895 MT, the lowest Q1 reading in 17 years.
In contrast, the Cocoa Association of Asia reported that Q1 Asian cocoa grindings rose 5.2% year-over-year to 223,503 MT, beating expectations of a 6.7% decline, offering a rare bright spot in global demand data.
Bloomberg reported that Nigerian cocoa exports in May rose 28% year-over-year to 18,034 MT, though Nigeria’s Cocoa Association projects that overall Nigerian production in 2025/26 will fall 11% year-over-year to 305,000 MT.
Both major West African producers have also moved to slash payments to farmers, with Ghana cutting the official farmgate price by nearly 30% and the Ivory Coast reducing cocoa farmers’ pay by 57%, effective from the mid-crop harvest that began in March.
On April 29, StoneX cut its 2026/27 global cocoa surplus estimate to 149,000 MT from a January forecast of 267,000 MT, citing El Niño risks to West African output, providing medium-term price support despite near-term inventory headwinds.
