On Thursday, July ICE NY cocoa (CCN26) closed at +292 (+7.06%), marking a three-month high, while July ICE London cocoa #7 (CAN26) closed at +189 (+6.09%). This surge is attributed to concerns over the potential impacts of an El Niño weather pattern, which the NOAA predicts has a 61% chance of forming between May and July, possibly leading to adverse conditions for cocoa production in West Africa.
Additionally, early surveys indicate a below-average formation of cherelles, foreshadowing a weak outlook for the 2026/27 West African cocoa harvest. Amidst a challenging global supply landscape, the Ivory Coast reported cocoa shipments of 1.54 million metric tons (MMT) this marketing year, a 0.7% increase from the previous year, while Nigeria faces an estimated 11% production decline, projected at 305,000 MT for 2025/26.
Market conditions are complicated by excess cocoa inventories, which rose to a 20.5-month high of 2,668,548 bags. In stark contrast, North American Q1 cocoa grindings fell by 3.8% year-over-year to 106,087 MT, and European grindings dropped 7.8% year-over-year to 325,895 MT, suggesting weaker demand for chocolate products.
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