Ample cocoa supplies weigh on prices

The cocoa market is once again caught between two opposing forces. In the short term, stronger supplies from West Africa and Nigeria, combined with rising exchange stocks, are putting pressure on prices. At the same time, concerns about the 2026/27 crop are mounting. Ghana and Côte d'Ivoire in particular could produce less cocoa next season, while El Niño poses a significant weather risk.The correction on the futures market continued this week. On Tuesday, the December contract in New York lost 1.95% to close at $5,829 per tonne. In London, cocoa fell 2.35% to close at £4,153 per tonne. A week earlier, New York was still trading above $6,000 per tonne.Ample supplies in the current season are the main factor keeping a lid on prices. In Côte d'Ivoire, the world's largest producer, cocoa arrivals at ports had reached 2.11 million tonnes by early August. That is 20% more than in the same period last season. Nigeria is also contributing to the more comfortable supply picture. Exports reached 16,052 tonnes in July, up 18% year on year.Exchange stocks have also recovered considerably. ICE-registered cocoa stocks reached their highest level in two years in early August, at almost 3.4 million bags. This indicates that the acute tightness that previously dominated the market has eased significantly.Ghana has also had a relatively good harvest. Production for the 2025/26 season is estimated at 750,000 tonnes, up 25.6% from 597,000 tonnes a year earlier.This largely explains why cocoa prices are struggling to establish a renewed upward trend. Speculators also appear, for now, to be expecting further downward pressure. In the week to 18 August, they increased their net short position in New York by 1,540 contracts to 19,428 contracts.2026/27 crop will be decisiveHowever, the situation could change over the coming months. Attention is rapidly shifting towards the 2026/27 main crop. In Ghana, the latest assessments point to production of around 650,000 tonnes, 13% less than last season. Earlier estimates from regulator COCOBOD were even considerably more pessimistic, at between 450,000 and 550,000 tonnes. Disease, ageing plantations and unfavourable weather are among the factors weighing on the outlook.The first indications from Côte d'Ivoire are also less favourable. The development of young pods is lagging behind, while early crop assessments put production at an average of around 1.8 million tonnes. That would be approximately 18% below the roughly 2.2 million tonnes produced in the current season.Adding to these concerns is the risk from El Niño. The current El Niño event is expected to become exceptionally strong. For the West African cocoa belt, this generally means a greater risk of hot and dry weather. This could put soil moisture and ultimately yields under pressure.Surplus shrinks rapidlyMarket analysts therefore still expect sufficient cocoa supplies, but the projected surplus is shrinking rapidly. At the end of July, StoneX cut its forecast for the global cocoa surplus in 2026/27 from 149,000 tonnes to just 25,000 tonnes. Transgraph Consulting expects a surplus of 80,000 tonnes, compared with 415,000 tonnes in the current season. Hedgepoint is somewhat higher, forecasting a surplus of 111,000 tonnes.The forecasts vary considerably, but they all point in the same direction: the relatively comfortable balance in 2025/26 could become significantly tighter next season. This leaves the market vulnerable to any setback in West Africa.Mixed picture on demandMeanwhile, there is no clear direction on the demand side. European cocoa grindings fell by 4.6% in the second quarter to 316,366 tonnes. This was the lowest second-quarter volume in six years. The impact of the high raw material costs seen in recent years therefore remains clearly visible in Europe's chocolate industry. Outside Europe, the picture is much stronger. North American grindings unexpectedly increased by 7.7% to 109,659 tonnes. In Asia, cocoa grindings were as much as 25% higher, reaching a total of 224,646 tonnes.