NY cocoa futures have stabilized in a $5,000-5,700 range after pulling back from an early-July rally near $5,700 that was driven by renewed West Africa weather concerns and speculative buying. Prices are now about 35% below year-earlier levels, when the market was still reeling from the worst supply crisis in decades. Inventories on ICE are near two-year highs, tempering further upside for now.
The ICCO's May 2026 bulletin confirmed that the 2024/25 cocoa year produced a small surplus: production of 4.723 million tonnes against grindings of 4.628 million tonnes, yielding a surplus of roughly 48,000 tonnes. This compares with a February estimate of 75,000 tonnes, meaning the surplus narrowed as the season progressed. The critical shift is that the market has moved from the extreme deficit conditions of 2023/24 — when the shortfall was 490,000 tonnes — to a more balanced posture. StoneX projects larger surpluses ahead: approximately 247,000 tonnes in 2025/26 and 149,000 tonnes in 2026/27, though these have already been revised down from earlier, larger surplus estimates due to El Nino risk.
Cote d'Ivoire, the world's largest producer, is showing signs of recovery. Port arrivals to mid-May 2026 exceeded 1.7 million tonnes, with the 2025/26 crop projected in the 2.0-2.1 million tonne range, signaling a meaningful recovery from the crisis years. Ghana's output is also improving, though at a slower pace. Combined, Cote d'Ivoire and Ghana still account for more than 60% of global cocoa output, making their production trajectory the dominant swing factor in the global balance.
But the recovery narrative has limits. Swollen shoot virus disease (CSSVD) remains a persistent threat across West Africa. The disease, spread by mealybugs, destroys infected trees over several years and requires complete replanting in affected areas. Ghana has been particularly hard hit, with CSSVD estimated to have infected 17% of its cocoa area. The average age of West African cocoa trees is also elevated, with many groves past peak productivity. These structural factors cap the upside potential of any recovery, even with improved farming practices and government support programs.
On the demand side, global grindings — a proxy for cocoa consumption — have shown resilience. The ICCO reported 2024/25 grindings of 4.628 million tonnes, down only slightly from pre-crisis levels despite the extreme price volatility of the past two years. European grind data for Q2 2026 showed mixed results, with some processors reducing throughput in response to high inventory levels. Asian grindings remained relatively stable. The key uncertainty for demand is the extent to which high retail chocolate prices over the past 18 months have permanently altered consumer behavior, particularly in price-sensitive emerging markets.
Analyst views on the second half of 2026 diverge. The bull case centers on El Nino disrupting West Africa's main crop, which begins its harvest window in October. Even without a severe weather event, the structural constraints from CSSVD and aging trees mean production growth is capped well below pre-crisis levels. The bear case points to the growing surplus projections, ICE inventories at two-year highs, and the potential for demand destruction if retail prices remain elevated. The base case is for cocoa to trade in a $4,800-5,800 range through year-end, with weather and disease developments in West Africa the primary swing factors.
Forward curves suggest the market expects continued surplus conditions into 2027, but with sufficient fragility that any weather shock could quickly reprice the risk premium. The cocoa market has demonstrated over the past two years that when supply tightens, prices can move violently — and the structural factors that caused the 2023/24 deficit have not been resolved, merely temporarily masked by a season of better weather.
Cocoa procurement is in a different regime from 2024. The shift from deficit to surplus means buyers have more negotiating leverage than at any point in the last two years. The recommended strategy is to use current price levels around $5,000-5,300 to extend forward coverage for H1 2027, as surplus projections from StoneX suggest prices could soften further into late 2026. However, avoid becoming complacent. The structural threats to West African production — CSSVD, aging trees, and El Nino risk — mean the surplus cycle could be shorter and shallower than market consensus expects. Layer hedges: lock in 40-50% of H1 2027 requirements at current levels, with options to add on any weather-driven dips below $4,800. Monitor Cote d'Ivoire port arrivals data weekly — any sustained decline in arrivals would be the first signal that the recovery is stalling. Also track European grind data as a leading demand indicator. The key risk to this strategy is El Nino intensifying during the October main crop harvest window, which could rapidly eliminate the projected surplus and send prices back toward $7,000+. Have a trigger plan: if the El Nino advisory strengthens beyond current levels, accelerate coverage.