Cocoa futures suffered another sharp sell-off as traders focused on abundant near-term supplies, surging Ivory Coast production and elevated ICE warehouse inventories, overwhelming longer-term concerns surrounding West African crop conditions and the potential impact of El Niño on the 2026/27 cocoa season.

December ICE New York cocoa closed at 5,784, down 207 points or 3.46%, while December ICE London cocoa #7 settled at 4,240, down 125 points or 2.86%. Both contracts fell to approximately one-week lows as the market continued to unwind the powerful rally that carried cocoa futures sharply higher through the summer.

The latest decline highlights the fundamental conflict currently defining the cocoa market.

Near-term supply is looking increasingly comfortable, particularly in Ivory Coast, the world’s largest cocoa producer. At the same time, traders are already looking beyond the current harvest toward a potentially much smaller 2026/27 crop in Ghana and Ivory Coast, where disease, ageing trees, weather conditions and El Niño risks could tighten the global balance again.

The result is a cocoa market with bearish immediate fundamentals but increasingly important bullish medium-term risks.

Cocoa Market Snapshot

Why Are Cocoa Futures Falling Today?

The immediate catalyst is straightforward: the market has more cocoa available than traders had previously feared.

Ivory Coast’s cocoa regulator reported that farmers harvested approximately 2.06 million tonnes between June 2025 and June 2026, compared with 1.58 million tonnes in the previous period.

That represents an increase of approximately 30% year-on-year.

For cocoa traders, this is significant because Ivory Coast represents the world’s largest producing origin. A major increase in production from the country’s farms changes the short-term supply equation and reduces the urgency surrounding physical availability.

International shipment data tell a similar story.

Bloomberg data showed Ivory Coast cocoa shipments during the international marketing year reaching approximately 2.14 million tonnes, around 18% above the comparable period.

The market therefore has a very clear near-term message:

There is cocoa available.

That has encouraged traders to remove some of the supply-risk premium that had accumulated during the previous rally.

Ivory Coast Production Is the Biggest Bearish Catalyst

The Ivory Coast remains the centre of the current bearish argument.

The country’s 2.06 MMT harvest represents a substantial recovery in production and demonstrates how quickly the physical market can change when growing conditions allow farmers to produce larger crops.

The increase has helped reassure processors and commercial buyers that cocoa availability is considerably better than it was during the severe supply crisis that sent prices dramatically higher.

However, there is an important complication.

The Ivory Coast has changed its domestic marketing calendar, moving the beginning of its local marketing year to September 1.

Under the revised calendar, Reuters data showed deliveries between September 1 and September 13 at approximately 26,000 tonnes, down 45.8% from the comparable period.

Therefore, while the broader 2025/26 production numbers are extremely bearish, traders must be careful about interpreting early 2026/27 delivery figures because of the change in marketing-year timing.

ICE Cocoa Inventories Remain a Major Bearish Signal

Another major problem for cocoa bulls is the level of exchange-monitored inventories.

ICE cocoa inventories reached approximately 3.44 million bags, close to the highest level in around two years.

Stocks stood at approximately 3,436,742 bags on September 4, before remaining close to that level.

That matters because warehouse inventories provide the market with a physical buffer.

When inventories are extremely low, traders tend to price in a greater probability that even a modest supply disruption could create a shortage.

When inventories are rebuilding, the market has more protection against production problems.

This is why rising ICE stocks are currently acting as a significant bearish influence on cocoa prices.

Recent market commentary has also pointed to the global cocoa market being considerably better supplied than during the 2023/24 crisis.

The implication is clear:

The market does not currently face the same immediate physical shortage that previously justified extreme cocoa prices.

The 2026/27 Cocoa Crop Is a Very Different Story

This is where the bearish argument becomes much less straightforward.

While the current crop is generating abundant supply, preliminary estimates for 2026/27 point toward a meaningful deterioration in production.

Ivory Coast’s early production outlook has been placed around 1.8 million tonnes, compared with approximately 2.2 million tonnes previously.

That would represent a potential decline of around 18%.

Ghana is facing an even more complicated production outlook.

Earlier estimates placed Ghana’s 2026/27 crop around 650,000 tonnes, compared with approximately 750,000 tonnes during 2025/26.

Other projections have suggested the possibility of an even lower production range.

The reasons include:

• Ageing cocoa trees
• Swollen shoot disease
• Black pod disease
• Weather-related damage
• Poor flowering conditions
• Heavy rainfall
• Potential El Niño disruption
• Structural underinvestment in some producing regions

This means traders cannot simply extrapolate the current year’s strong Ivory Coast production into the next season.

Cocoa Supply Estimates Are Becoming Much Tighter

Several analysts have already reduced their estimates for the expected global cocoa surplus.

StoneX reduced its 2026/27 surplus estimate to approximately 25,000 tonnes, from 149,000 tonnes previously.

Transgraph reduced its estimate to around 80,000 tonnes, compared with an earlier forecast of 415,000 tonnes.

The significance of these revisions is enormous.

A market moving from a large projected surplus toward a near-balanced market has a much smaller margin of safety.

A 25,000-tonne surplus is technically still a surplus.

But compared with hundreds of thousands of tonnes, it leaves considerably less room for production disappointments.

This is why the cocoa market can simultaneously experience bearish price pressure today and bullish supply risk for 2026/27.

Ghana Cocoa Production Faces Structural Problems

Ghana is another major source of uncertainty.

The country produced approximately 750,000 tonnes during the 2025/26 season, representing a strong recovery of roughly 25.6% from the previous season’s 597,000 tonnes.

However, the recovery may not be sustainable.

COCOBOD has warned about problems involving ageing farms, swollen shoot disease and weather conditions.

Earlier projections suggested 2026/27 production could fall dramatically into a range of 450,000-550,000 tonnes.

More recent estimates have put potential production closer to 650,000 tonnes, but the direction remains lower.

The market therefore faces a potentially important supply contraction at exactly the time when traders are already reassessing global production.

El Niño Could Become the Next Major Cocoa Catalyst

Weather remains one of the most important variables for cocoa.

A potentially powerful El Niño event could create significantly less favourable growing conditions across parts of West Africa.

Cocoa trees require suitable moisture conditions and are vulnerable to prolonged periods of excessive heat or dryness.

The market is therefore likely to become increasingly sensitive to weather forecasts as the 2026/27 crop develops.

The important distinction is timing.

El Niño is a future supply risk.

High Ivory Coast production and elevated ICE stocks are current supply realities.

That explains why bearish pressure can dominate prices today even while traders remain concerned about the next crop.

Cocoa Demand Is Sending Mixed Signals

Supply is only half of the cocoa equation.

Demand has also become an important source of uncertainty after the huge price increases experienced during the previous cocoa rally.

High cocoa prices have forced chocolate manufacturers and processors to manage costs aggressively.

European cocoa grindings illustrate the pressure.

Q2 European grindings fell 4.6% year-on-year to 316,366 tonnes, the lowest Q2 level in six years.

That is a significant bearish demand signal.

However, North America delivered a very different result.

Q2 North American grindings increased 7.7% to 109,659 tonnes.

Asia was stronger again, with Q2 grindings increasing 25% to 224,646 tonnes.

The result is a fragmented demand picture.

Europe is showing meaningful demand weakness, while North America and Asia are providing evidence that cocoa consumption has not collapsed globally.

Bullish Sentiment

1. 2026/27 Supply Could Contract Sharply

The most important bullish argument is the possibility that production declines across Ghana and Ivory Coast could substantially reduce the global supply buffer.

2. El Niño Creates Significant Weather Risk

A powerful El Niño could damage the next crop and accelerate the reduction in global supply expectations.

3. Ivory Coast 2026/27 Production Could Fall 18%

An early estimate of approximately 1.8 MMT versus around 2.2 MMT would represent a substantial decline from the previous season.

4. Ghana Faces Structural Production Problems

Ageing farms, swollen shoot disease and weather-related issues could prevent Ghana from maintaining its recent production recovery.

5. Global Surplus Forecasts Are Shrinking

StoneX and Transgraph have both reduced their projected 2026/27 surpluses significantly.

A much smaller surplus leaves the market more vulnerable to any additional supply disruption.

6. Asian Cocoa Demand Remains Strong

Asian Q2 grindings increased 25%, demonstrating that higher cocoa prices have not eliminated demand across every major consuming region.

Bearish Sentiment

1. Ivory Coast Production Has Surged

The 2.06 MMT harvest represents a 30% year-on-year increase and is currently one of the strongest bearish fundamentals in the market.

2. ICE Inventories Are Near Two-Year Highs

Inventories around 3.43 million bags provide a substantial physical buffer and reduce immediate shortage fears.

3. The Global Market Is Currently Well Supplied

Industry commentary indicates that physical cocoa availability is considerably healthier than during the previous supply crisis.

4. European Grindings Are Falling

The 4.6% decline in European Q2 grindings suggests that high cocoa prices have already affected demand.

5. Higher Prices Can Destroy Demand

Chocolate manufacturers can reformulate products, reduce cocoa content, delay purchases or pass higher costs to consumers.

These mechanisms can ultimately limit how far cocoa prices can rise.

6. Current Supply Is Stronger Than Expected

The market had previously priced significant West African supply risks into futures.

The latest production figures show that at least some of those fears were overstated for the current crop.

The Cocoa Market Is Being Pulled in Two Directions

The current cocoa market can therefore be divided into two separate stories.

The 2025/26 story is bearish.

Production has recovered, Ivory Coast shipments are strong, ICE inventories are high and global physical availability has improved.

The 2026/27 story is considerably more uncertain.

Ghanaian production could decline, Ivory Coast production may fall sharply, disease remains a problem and El Niño could further damage the next crop.

This distinction is extremely important for traders.

A bearish short-term market does not automatically mean the longer-term supply outlook is bearish.

Likewise, a potentially tighter 2026/27 balance does not automatically mean cocoa prices must immediately return to their previous highs.

Cocoa Prices Previously Reached 11.5-Month Highs

The scale of the recent reversal is also important.

New York cocoa reached an approximately 11.5-month high on August 31, while London cocoa reached an approximately 11.5-month high on September 1.

The subsequent decline shows how quickly sentiment can change when production data contradicts supply fears.

The market has therefore moved from aggressively pricing supply risk toward aggressively pricing improved availability.

That makes cocoa particularly sensitive to every new production, inventory and weather report.

What Traders Are Watching Next

The next major cocoa price moves are likely to depend on several variables.

Ivory Coast Crop Development

Traders will monitor early 2026/27 arrivals and production reports to determine whether the projected decline toward 1.8 MMT is realistic.

Ghana Production

The size of the Ghana crop will be closely watched as disease and weather concerns remain elevated.

ICE Warehouse Stocks

A continued rise in exchange stocks would strengthen the bearish case, while a sustained decline could quickly revive supply concerns.

West African Weather

Rainfall, sunshine, disease and crop development will remain critical.

El Niño

Any strengthening of El Niño forecasts could rapidly increase the risk premium embedded in cocoa futures.

Global Grindings

European, North American and Asian processing data will provide important evidence about whether high cocoa prices are continuing to destroy demand.

Currency Markets

The US dollar and major producer-country currencies can influence commodity pricing, producer economics and hedging decisions.

Currency Hedger View

Cocoa is a global commodity, but businesses exposed to cocoa prices are also exposed to foreign-exchange risk.

Chocolate manufacturers, cocoa processors, importers, exporters, traders and international businesses can have substantial payments in USD, EUR, GBP and other currencies.

That means managing the cocoa price is only part of the financial equation.

A favourable cocoa purchase price can be affected by an adverse currency move.

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Currency Hedger is part of Octalas Group and operates through regulated payment infrastructure provided by its regulated partners. FX markets involve risk, and market information should not be interpreted as a guarantee of future exchange rates or trading outcomes.

Today Markets View

Cocoa futures are currently facing a powerful bearish combination of higher Ivory Coast production, strong export flows and elevated ICE inventories.

That explains the sharp decline from the recent highs.

However, the longer-term picture is far less straightforward.

The projected decline in Ghanaian and Ivory Coast production, shrinking 2026/27 surplus estimates, disease concerns and the potential impact of a strong El Niño could all rebuild the cocoa risk premium if the next crop deteriorates.

For now, the market is being driven by the reality of abundant current supply rather than the possibility of future shortages.

That makes the next phase of the cocoa market heavily dependent on crop development.

If 2026/27 production begins to confirm the more bearish estimates, cocoa could remain under pressure as inventories continue rebuilding.

If weather conditions deteriorate and production forecasts are revised lower again, the market could quickly shift its focus back toward scarcity.

For traders, the key question is therefore not simply whether cocoa is bullish or bearish.

It is whether the current supply recovery can continue long enough to rebuild inventories before the next West African crop comes under pressure.

“Cocoa is currently being priced around abundant near-term availability, but the 2026/27 crop could become the next major test for the market. The balance between rising inventories today and declining production expectations tomorrow will remain critical for cocoa prices.”

Louis Roche, Analyst, Today Markets

Today Markets Analysis | Commodities | Cocoa Futures | Cocoa Price Forecast | Cocoa Market Outlook | 2026/27 Cocoa Supply

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