Cocoa prices surge again because of excessive rain

Cocoa prices rose sharply during the first two weeks of February. Extremely heavy rainfall is causing significant damage to the crop outlook in the main producing countries of West Africa. Nevertheless, the broader market context still points to relatively favourable supply conditions.Cocoa prices rose very sharply during the first two weeks of July. Between 29 June and 10 July, the price of cocoa on the ICE US market increased by 22.1%, from $4,967 to $6,065 per tonne. Over the same period, the London cocoa price rose by 21.4%, from the equivalent of $4,911 to $5,961 per tonne. Although both markets recorded substantial gains, the increase was slightly stronger in the US market. In London, cocoa futures climbed to their highest level in around nine months, while New York prices also strengthened significantly.The sharp rally in cocoa prices during the first two weeks of July was primarily driven by worsening weather concerns in West Africa. Heavy rainfall in Côte d’Ivoire and Ghana raised fears of flooding, transport disruptions and increased disease pressure, while also creating greater uncertainty around the outlook for the 2026/27 main crop. These concerns prompted speculative investors to reduce their bearish positions, adding further momentum to the upward move.While dry conditions were largely responsible for the extreme price levels seen in recent months, excessive rainfall is now becoming a growing concern. Too much moisture can reduce bean quality, increase disease pressure and negatively affect the size of the next crop. Flooding and poor road conditions have already been reported in parts of Côte d’Ivoire and Ghana, reinforcing concerns that the current weather pattern could weigh on future production.At the same time, analysts have become more cautious about the global cocoa balance for the 2026/27 season. StoneX recently reduced its forecast for the global cocoa surplus from 267,000 tonnes to 149,000 tonnes. Although the market is still expected to remain in surplus, the smaller margin has increased the risk premium in cocoa prices.Supply conditions remain relatively comfortable One reason prices were able to rise so sharply is that the market remains highly sensitive to weather-related risks. However, it is far from certain that the current price increase will last. Between 9 and 10 July, US cocoa prices fell by 6%, or around $390 per tonne. Several arguments suggest that the recent rally may have been an overreaction. Most importantly, supply conditions for the current 2025/26 season remain relatively comfortable. Cocoa arrivals at ports in Côte d’Ivoire reached approximately 1.93 million tonnes by 5 July, compared with around 1.63 million tonnes during the same period last year. This represents an increase of almost 19%. Other market estimates place total arrivals slightly above 2 million tonnes, confirming that the current crop is performing considerably better than last season. These strong arrival figures have reassured the market that near-term bean availability remains adequate and were an important source of downward pressure during the second week of July.Market awaits half-year processing figures Weak European demand is providing an additional stabilising influence. European cocoa grindings fell by 7.8% year-on-year during the first quarter of 2026, reaching their lowest first-quarter level in seventeen years. This suggests that processors and chocolate manufacturers remain cautious after several years of exceptionally high cocoa costs.The market is now awaiting the European second-quarter grinding figures. These data will provide an important indication of whether lower cocoa prices have encouraged processors to increase activity or whether weak consumer demand and high retail chocolate prices are continuing to limit cocoa usage.