For the second consecutive session, cocoa futures finished sharply lower on Wednesday as mounting evidence of plentiful supply outweighed lingering worries about West African crop quality.

December ICE NY cocoa (CCZ26) settled down 298 points (-4.54%), while December ICE London cocoa #7 (CAZ26) lost 238 (-4.94%).

Supply Signals Weigh on the Market

The downturn accelerated after Barry Callebaut AG, the world's biggest cocoa processor, said the global cocoa market is well supplied—leaving it better prepared to manage risks than during the 2023/24 El Niño weather event that drove prices to record highs.

Output from the Ivory Coast, the world's largest cocoa producer, is adding further pressure. Cumulative data released Tuesday showed farmers shipped 2.14 MMT of cocoa to ports in the current marketing year (October 1, 2025, through August 30, 2026), up +19% from the same period a year ago.

On Wednesday, the Ivory Coast cocoa regulator, Le Conseil du Café Cacao, reported that the country harvested 2.06 MMT of cocoa from June 2025 to June 2026, up +30% from 1.58 MMT a year earlier.

Rising exchange inventories are also bearish for prices. ICE cocoa stocks climbed to a two-year high of 3,411,776 bags on Tuesday.

Current supplies look adequate elsewhere as well. On July 21, Bloomberg reported that Nigeria's July cocoa bean exports rose +18% y/y to 16,052 MT. Nigeria is the world's fifth-largest cocoa producer.

Quality and Crop Concerns Offer Support

Despite Wednesday's slide, cocoa had strengthened over the past week, with NY cocoa posting an 11-month high on Monday and London cocoa reaching an 11-month high on Tuesday.

Concerns about the quality of this year's West African cocoa crops remain a supportive factor. Cloudy weather and limited sunshine in the Ivory Coast and Ghana are allowing black pod disease to spread, lowering cocoa bean quality.

On August 20, Ghana's Cocoa Board said that after a field survey of pod counts, it estimates the 2026/27 Ghana cocoa crop will be 650,000 MT, down -13% from 750,000 MT last year. Ghana is the world's second-largest cocoa producer.

Early surveys of the 2026/27 Ivory Coast cocoa crop also point to a weaker main harvest, which begins this month. Assessments show below-average cherelle formation on cocoa trees, poor pod development, and an average estimate of 1.8 MMT for the season starting in September—down -18% from about 2.2 MMT in 2025/26.

Analyst Forecasts and Weather Risks

StoneX on July 29 cut its 2026/27 global cocoa surplus estimate to 25,000 MT from a forecast of 149,000 MT in April, citing risks to the West African cocoa crop from an expected El Niño.

Transgraph Consulting on July 23 forecast that the global cocoa surplus in 2026-2027 will shrink to 80,000 metric tons from 415,000 MT in 2025-2026, mainly due to an expected decline in production to 4.87 MMT in 2026-2027 from 5.11 MMT in 2025-2026.

Ghana's cocoa regulator, COCOBOD, on July 30 projected Ghana's 2026/27 cocoa production could fall to 450,000 MT to 550,000 MT from 750,000 MT projected for 2025/26 due to the combined effects of swollen shoot disease, aging cocoa farms, and the likelihood of adverse weather from the El Niño weather pattern.

Production is strong for the current marketing year, however. Ghana's cocoa board reported last Wednesday that 750,000 MT of cocoa has been harvested for the 2025/26 season, which ends at the end of this month, up +25.6% from 597,000 MT in 2024/25.

Cocoa prices also have underlying medium-term support from future weather concerns. On July 8, the US Climate Prediction Center said the El Niño weather pattern that emerged across the equatorial Pacific last month will likely be one of the strongest in more than 75 years. An El Niño typically brings warmer, drier conditions to West Africa, reducing soil moisture, stressing cocoa trees, and lowering yields.

Mixed Demand in the Second Quarter

Cocoa demand was mixed in Q2. On July 16, the European Cocoa Association reported that Q2 European cocoa grindings fell -4.6% to 316,366 MT—a larger decline than the -1.5% y/y expected and the lowest level for Q2 in 6 years.

However, the National Confectioners Association reported that Q2 North American cocoa grindings unexpectedly rose by +7.7% y/y to 109,659 MT, well above expectations of a -1% y/y decline, easing cocoa demand fears.

Asian cocoa demand improved as well after the Cocoa Association of Asia reported that Q2 Asian cocoa grindings rose by +25% y/y to 224,646 MT, well above expectations of +9% y/y.

On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.