Cocoa Rebounds as Ivory Coast Warns El Niño Could Cut Crop by a Quarter

Cocoa futures bounced off four-month lows this week after Ivory Coast’s national weather agency warned that an exceptionally strong El Niño could cut the top grower’s 2026/27 crop by 21% to 25%. London cocoa rose 2.9% to £3,875 a ton on Wednesday, recovering from a four-month low of £3,675 a day earlier, while New York cocoa gained 3.2% to $4,893 a ton.

What happened

The bounce followed a sharp slide driven by comfortable near-term supplies. Broker ADMIS had noted that a build-up in exchange stocks over recent months suggested supply was outstripping demand, even as El Niño remained a risk. Prices then extended the recovery on Thursday, leaving the market close to a weekly reversal from Tuesday’s four-and-a-half-month low, ADMIS said, with a sizable net speculative short position still in place that could feed further short-covering.

The catalyst was a report from the National Meteorology Directorate of SODEXAM, Ivory Coast’s state meteorological agency, seen by Reuters. The agency described a “Super El Niño 2026-2027” as “structurally severe” if current Pacific Ocean warming trends continue. It said the water deficit combined with high temperatures can cause wilting and premature drop of young pods, flower abortion and tree defoliation. Annual rainfall could decline by 10% to 27%, the rainy season could be shorter and the dry season longer, with knock-on strain on water reservoirs.

Ivory Coast, the world’s largest cocoa producer, harvested more than 2 million metric tons last season, according to exporters. In June the country temporarily halted sales of export contracts for the 2026/27 main crop after selling about 1.15 million tons, while it waited for a clearer harvest estimate.

Drivers

The market is being pulled in two directions. Near-term availability still looks ample after a large 2025/26 crop and the rise in exchange stocks that had pushed prices to four-month lows. Against that, the outlook for the next West African crop has darkened. The U.S. Climate Prediction Center has said the current El Niño continues to strengthen and will remain strong to very strong through the January–March period, ADMIS noted. Drier-than-normal conditions typical of El Niño in West Africa would then last long enough to threaten the region’s 2026/27 mid-crop. ADMIS said a decline of as much as 25% in Ivory Coast’s production this season may not be an exaggeration, and that Ghana is also likely to see a severe drop in output.

Port arrivals have already disappointed some exporters. A European cocoa export company director based in Abidjan told Reuters that arrivals were below initial forecasts and that production was not late, but down, raising the question of whether a 25% decline might even prove optimistic. Soil conditions in West Africa were expected to dry up over the following week to 10 days, ADMIS said.

What it means for buyers and producers

For chocolate makers, grinders and physical traders, the distinction between nearby and forward supply is the core issue. Nearby beans still look relatively plentiful, which argues against panic buying of prompt cargoes. The risk sits in the 2026/27 main crop and mid-crop, after origin already paused additional forward sales in June. Buyers who still need cover for next season may find origin less willing to sell. Producers in Ivory Coast and Ghana face a more uncertain harvest calendar if rains stay poor. Exchange inventories offer a buffer, but that buffer will be tested if arrivals remain weak into early 2027.

What to watch

Weekly port arrivals in Ivory Coast, further SODEXAM or Ghana crop commentary, and certified exchange stocks will show whether the weather warning is already showing up in beans. Speculative positioning also matters: a large net short leaves room for further covering if dryness persists. The strength of El Niño into early 2027, and rainfall over the coming weeks, will decide whether this week’s rebound is a one-off or the start of a tighter forward market.

Key figures

SODEXAM forecast: Ivory Coast 2026/27 cocoa output could fall 21% to 25%.
Possible rainfall decline: 10% to 27%, with a shorter rainy season and longer dry season.
London cocoa, Wednesday: £3,875 a ton, up 2.9%, after a four-month low of £3,675 on Tuesday.
New York cocoa, Wednesday: $4,893 a ton, up 3.2%, after a four-month low of $4,764.
Last season’s Ivorian harvest: more than 2 million metric tons, according to exporters.
Forward sales: about 1.15 million tons of the 2026/27 main crop sold before a pause in June.