Cocoa Futures on the Rise

Cocoa futures rose toward $4,180 per tonne, the highest in nearly two weeks, driven by weather-related factors and intense short covering. The main trigger came from the Ivory Coast, the world’s largest cocoa producer, where heavy rains caused flooding in key growing regions, disrupting farming activity and logistics and raising concerns over supply flows and quality. The market has also increasingly priced in climate risks, with the potential formation of an El Niño event returning to focus and raising concerns over West African cocoa crop in the coming months. The phenomenon is associated with volatile global weather patterns, including both excess rainfall and drought conditions depending on the region. Nevertheless, signs of abundant cocoa supplies limited the upside. ICE cocoa inventories rose to a 1.75-year high of 2,745,277 bags as of May 26.

Cocoa futures traded around $3,800 per tonne, holding close to the lowest since early May, amid improved production prospects in top grower Ivory Coast and still weak global demand. On May 14, the country raised its cocoa delivery estimate to between 2.1 and 2.2 MMT for the 2025/26 season, up from a previous projection of 1.8-1.9 MMT, citing favorable weather. At the same time, the latest data showed ICE cocoa inventories rose to a 1.75-year high of 2,668,548 bags, indicating ample availability in the short term. However, fertilizer shortages and climate risks, including a potential El Niño event, continue to cloud the outlook for West African production. Concerns also persisted over unsold stockpiles in the Ivory Coast, as farmers remain unpaid for beans sold during the main crop, fuelling protests and discouragement that could weigh on the next harvest.

Cocoa futures fell toward $4,000 per tonne, pulling away from a 3.5-month high of $4,709 per tonne hit on May 11, pressured by forecasts of higher cocoa deliveries from the Ivory Coast. The top grower now projects cocoa output of 2.2 MMT for the 2025/26 season, up from a previous projection of 1.8-1.9 MMT, citing favorable weather. Still, the outlook remains clouded by concerns over fertilizer shortages and potential El Niño effects on West African crops. Irregular rainfall in the Ivory Coast has once again raised alarm bells in the global cocoa market. Farmers in the country's main producing regions reported growing concern about the possibility of a smaller, lower-quality mid-season crop, just as the harvest is entering its crucial phase. In the meantime, early surveys of the 2026/27 West African cocoa crop showed below-average cherelle formation on cocoa trees, signaling a weak outlook for the main cocoa harvest, which begins in October.