Cocoa Falls 4% 📉 Are High Inventories Weighing on Prices?

ICE cocoa futures (COCOA) are down nearly 4% and remain under pressure following the strong rebound seen in late August and early September. On the one hand, rising ICE inventories and improving supplies from Ivory Coast strengthen the bearish supply-side case, while on the other hand the market is still pricing in weather risks and quality concerns across West Africa. This creates a classic futures-market setup: near-term supply is weighing on prices, but medium-term fundamentals remain uncertain enough to prevent the market from fully removing the risk premium.

• ICE cocoa inventories have risen to their highest level in around 2.25 years, reaching 3,452,949 bags. This is clearly negative for prices, as it points to improving availability of cocoa in the exchange-traded market.
• Additional pressure comes from Ivory Coast. The country’s regulator reported that around 2.06 million metric tons of cocoa were harvested between June and the end of August, up 30% from a year earlier.
• Port-delivery data also remain strong. From the start of the international marketing year through September 27, farmers delivered around 2.18 million metric tons of cocoa, up 19.8% year on year.
• The picture is not entirely straightforward, however, as the pace of deliveries weakened in September. Between September 1 and 13, Ivory Coast deliveries were around 45.8% lower than a year earlier, showing that very strong full-season data do not necessarily imply an equally strong start to the new cycle.
• Barry Callebaut said the global cocoa market is now better supplied than during the 2023/24 El Niño-related crisis. This supports the view that the extreme supply tightness seen in previous years has eased significantly.
• Weather remains the main bullish factor. Excessive rainfall and cloudy conditions in Ivory Coast and Ghana are increasing the risk of black pod disease and may reduce bean quality.
• Early estimates for the 2026/27 season are also far from comfortable. Forecasts for Ivory Coast point to production of around 1.8 million metric tons, well below roughly 2.2 million metric tons in 2025/26.
• Ghana also remains a weak point in the market. The Cocoa Board estimates the 2026/27 crop at around 650,000 metric tons versus 750,000 previously, while more pessimistic projections point to just 450,000-550,000 metric tons.
• Some analysts have also reduced their expectations for the global surplus. StoneX cut its 2026/27 surplus forecast to 25,000 metric tons from 149,000 previously, while Transgraph Consulting expects the surplus to shrink to around 80,000 metric tons from 415,000 in 2025/26.
• Weather risk remains important over the medium term as well. A potential return of El Niño could bring warmer and drier conditions to West Africa, historically increasing the risk of weaker yields.
• Demand signals are mixed. European cocoa grindings fell 4.6% year on year in Q2 to 316,366 metric tons, pointing to softer industrial demand.
• By contrast, data from North America and Asia were much stronger. North American grindings rose 7.7% year on year to 109,659 metric tons, while Asian grindings surged 25% to 224,646 metric tons.

The market is currently caught between improving near-term supply and the risk of a weaker next season. In the short term, rising inventories and stronger deliveries have the upper hand, but further out on the curve, weather, Ghana’s production outlook, and crop quality remain risks the market cannot ignore.