Cocoa Futures Reach Multi-Week Highs on Strong Demand and West Africa Supply Risk
Cocoa futures pushed higher to hit multi-week peaks, driven by strong processing demand in Asia and weather disruptions in West Africa. December New York cocoa futures closed up 0.03% at 5,735 USD after hitting a one-month high, while London cocoa futures reached a six-week high. Data released by trade groups showed third-quarter cocoa grindings in Malaysia jumped 47% year-over-year to 89,414 metric tons.
Supply concerns are bolstering market support as heavy rains in Ivory Coast cut off roads and damage bridges, delaying harvests and shipments to ports right as the main season begins. Furthermore, early assessments for the 2026/27 Ivory Coast crop indicate pod formation is below average, pointing toward an 18% drop in output to 1.8 million metric tons. Long-term weather risks from a strong El Nino pattern and disease outbreaks in Ghana are expected to weigh further on West African yields.
Market gains remain capped by a strong U.S. dollar, which surged to a 1.5-year high, and expanding stockpiles. Inventories held at exchange warehouses rose to a 2.25-year high of over 3.58 million bags. Investors are now turning their attention to global third-quarter cocoa grinding reports scheduled for release on Thursday, which will provide a clearer picture of demand across Asian, European, and North American markets.
Key points
- December New York cocoa futures edged up to 5,735 USD, touching a one-month high.
- Malaysia third-quarter cocoa grindings surged 47% year-over-year to 89,414 metric tons.
- Heavy rainfall and flooding in Ivory Coast are disrupting early harvest efforts and port deliveries.
- Forecasts for Ivory Coast's 2026/27 main crop estimate an 18% drop in production to 1.8 million metric tons.
- Exchange inventories climbed to a 2.25-year high of 3,585,084 bags, limiting price gains.
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How we writeDisclaimerQuestions and answers
Why are cocoa prices rising?
Cocoa prices are rising due to strong processing demand in Malaysia, where third-quarter grindings rose 47% year-over-year, alongside heavy rains in West Africa that are slowing harvest activities and port shipments.
What factors are limiting cocoa price gains?
Cocoa price gains are capped by a rally in the U.S. dollar index to a 1.5-year high and rising exchange inventories, which reached a 2.25-year peak of 3,585,084 bags.
What is the production outlook for West African cocoa?
Early crop surveys project a weak outlook, with Ivory Coast production estimated to drop 18% to 1.8 million metric tons for 2026/27. Ghana also forecasts a 13% decline to 650,000 metric tons due to adverse weather, disease, and aging trees.