Cocoa prices edged higher on Wednesday, consolidating below last week's multi-month highs, as traders looked ahead to quarterly grindings data for clues on demand recovery. September ICE NY cocoa rose 1.33% to settle at $77 per metric ton, while London cocoa gained 0.58%, though gains were capped by a stronger British pound that hit a seven-week high.
Demand Data in Focus
The market is awaiting Q2 cocoa grindings data due Thursday from Asia, Europe, and North America. European grindings are expected to fall 1.5% year-over-year, and North American grindings are seen declining 1% annually. However, Asian grindings are projected to jump 9% year-over-year, building on a recovery seen in the first quarter. The data will provide the clearest signal yet on whether global demand is rebounding after a prolonged slump.
Weather and Supply Concerns
Cocoa prices have rallied sharply over the past month, with NY cocoa hitting a 6.25-month high and London cocoa reaching a 9.5-month high last Thursday. Heavy rains in Ivory Coast and Ghana have flooded roads, cutting off farmers' access to farms and ports and threatening global supplies. Excessive moisture also increases the risk of brown rot and black pod disease, reducing yields. The US Climate Prediction Center warned last week that the El Niño weather pattern that emerged last month will likely be one of the strongest in over 75 years, typically bringing warmer, drier conditions to West Africa that stress cocoa trees.
Early surveys of the 2026/27 Ivory Coast cocoa crop show below-average cherelle formation, signaling a weak outlook for the main harvest beginning in September. Early assessments estimate the crop at 1.8 million metric tons, down 18% from the 2025/26 season. The markets await new surveys in July to determine the final crop size.
Mixed Supply Signals
Rising inventories are a bearish factor: ICE cocoa inventories hit a two-year high of 3,204,512 bags on Tuesday. Cumulative data from Ivory Coast showed farmers shipped 2.09 million metric tons of cocoa to ports from October 1 through July 12, up 21% from a year ago. Nigerian cocoa exports rose 28% year-over-year in May to 18,034 metric tons. However, Nigeria's Cocoa Association projects 2025/26 production will fall 11% to 305,000 metric tons. Ghana cut its official farmer price by nearly 30% for the 2025/26 season, and Ivory Coast cut farmer pay by 57% effective March.
Demand Recovery Signs
Barry Callebaut AG, the world's largest cocoa processor, reported last Thursday that fiscal Q3 sales rose 5.7%, the first increase in over two years, signaling a potential demand recovery. This contrasts with weak Q1 grindings: North American Q1 grindings fell 3.8% year-over-year, European Q1 grindings dropped 7.8% (the lowest for a Q1 in 17 years), while Asian Q1 grindings unexpectedly rose 5.2%.
StoneX cut its 2026/27 global cocoa surplus estimate to 149,000 metric tons from 267,000 metric tons, citing El Niño risks to West African crops. The firm also trimmed its 2025/26 surplus forecast to 247,000 metric tons. The combination of weather threats, mixed supply data, and tentative demand recovery keeps the market in a delicate balance as traders await the grindings data.