Cocoa Market Analysis - July 2026

Market Overview

The cocoa market is currently experiencing significant pressure, with prices falling approximately 5% to $5,300 per tonne. This decline is attributed to a stronger U.S. dollar and rising inventories on the Intercontinental Exchange (ICE), which have reached their highest levels in two years.

Key Factors Influencing Cocoa Prices

• Rising Inventories: ICE cocoa inventories have climbed to 3.28 million bags, contributing to downward pressure on prices.
• Mixed Demand Signals: Cocoa grinding data shows a 4.6% year-over-year decline in Europe, while North America and Asia reported increases of 7.7% and 25%, respectively.
• Improving Supply Conditions: Nigerian cocoa exports surged by 30% year-over-year in June, and arrivals from Ivory Coast have also increased.
• Weather Risks: The potential impact of El Niño poses risks to future cocoa yields in West Africa, which could support prices in the medium term despite current pressures.

Demand Analysis

Recent reports indicate a mixed demand landscape for cocoa. The European Cocoa Association noted a significant decline in European cocoa grindings, marking the weakest second-quarter performance in six years. However, the North American and Asian markets have shown resilience, with notable increases in grindings that exceeded expectations. Barry Callebaut, a leading cocoa processor, reported a 5.7% annual sales growth, indicating a potential recovery in demand.

Supply Dynamics

Supply conditions have improved recently, with Nigerian cocoa exports and arrivals from Ivory Coast both showing significant increases. However, forecasts for the upcoming 2026/27 cocoa crop in Ivory Coast suggest a potential decline of about 18% compared to the previous season, raising concerns about future supply.

Outlook

Despite the current pressures from high inventories and a stronger dollar, the medium-term outlook for cocoa remains cautiously optimistic due to potential weather-related risks from El Niño, which could adversely affect future harvests in West Africa. Cocoa prices have already seen a decline of over 15% from recent highs, indicating volatility in the market.