Cocoa swings on West African weather and weak demand
El Niño and heavy rains threaten West African crop El Niño was confirmed, and heavy June rains flooded farms and roads in Ivory Coast and Ghana, raising disease risk and cutting yields. Early surveys show below-average cherelle formation, pointing to a smaller 2026/27 main crop. This tightens future supply and pushes cocoa prices up.
This is the main new bullish force this period, directly threatening supply and lifting prices.
European cocoa demand slumps European second-quarter cocoa grindings fell 4.6%, the lowest for a second quarter in six years, showing weak chocolate demand. This is a big drop that signals consumers are buying less, so demand for cocoa beans falls and prices drop.
This is the latest major bearish demand shock that sent prices down sharply.
Abundant current supply and high inventories Ivory Coast port arrivals are up about 20% this season, ICE inventories are near a 1.75-year high, and Nigerian June exports jumped 30%. This ample supply weighs on prices, even as future crop worries persist.
This is the key counterweight keeping a lid on prices despite weather threats.
Funds' record short position could fuel rally Funds held their largest net-short position in New York cocoa in over three years. If prices start rising, these funds may rush to buy back contracts, creating a short-covering rally that pushes prices higher quickly.
This explains a potential upside trigger from market positioning, adding to the bullish case.