Cocoa Surplus Could Disappear as West African Crop Risks Increase
West African crops face El Niño threats, potentially eliminating the global cocoa surplus and driving up prices by year-end.
Cocoa prices are projected to rise through the end of 2026, as El Niño poses a threat to West African production and is expected to eliminate the current global surplus. Analysts forecast London cocoa to reach £4,450 per tonne and New York cocoa to hit $6,000 per tonne by the year's end.
A poll of traders and analysts anticipates the 2026 and 2027 season moving from a surplus to a balanced market. Ivory Coast production is forecast to decrease from 1.98 million tonnes to 1.8 million tonnes. Ghana's output is projected to decline from 675,000 tonnes to 580,000 tonnes. Ecuador's production is expected to remain near 600,000 tonnes.
Weather patterns have re-emerged as the primary concern for supply. The US Climate Prediction Center has assigned an 81% probability to a very strong El Niño event occurring between October and December. Given that West Africa accounts for approximately 70% of the world's cocoa beans, disruptions in rainfall, disease outbreaks, and reduced farm labor can rapidly impact the global balance.
A balanced market leaves little room for crop disappointments. Any production shortfalls beyond current estimates would necessitate the use of inventories or a further weakening of demand. Chocolate manufacturers may face renewed competition for quality beans and certified supplies.
The existing surplus offers a temporary cushion. The forecasted shift towards a balanced market implies this buffer could diminish in the upcoming season, leaving chocolate producers more exposed to West African weather conditions and crop quality.