Cocoa prices rallied sharply at the end of March, with EU futures gaining 7% in a single session to close at £2,487/mt for the front month May 2026 contract. However, the drivers behind the move point more to short-covering and speculative positioning than to any change in supply fundamentals.

What drove the rally

The end-of-month price surge is attributed to profit-taking and the unwinding of sizable speculative short positions. Fund data for both Europe and the U.S. shows that speculators remain structurally short overall, suggesting the recent move is unlikely to have reversed that positioning. Broader commodity markets also received support from rising energy prices.

Certified cocoa stocks in warehouses across Europe and the U.S. remain well supplied, with levels stable. The forward curve remains in contango, with no meaningful supply risk signalled in the price structure.

West Africa: fertiliser supply risk and El Niño

African governments are reportedly concerned about securing crop inputs ahead of the main cocoa growing season, following disruption to fertiliser supply chains linked to the Middle East conflict. Trade sources cited by Bloomberg estimated that some countries, including Ivory Coast, could face significant shortages.

Ghana has announced plans to provide free fertiliser for the current season, with annual demand of around 400,000 mt. The scale of any actual input shortfall and its impact on crop output remains unclear at this stage.

A further risk on the horizon: the European Centre for Medium-Range Weather Forecasts (ECMWF) puts an 80% probability on a strong El Niño event developing, with a 20–25% chance of a Super El Niño. NOAA suggests the phenomenon could develop as early as Q3. A strong El Niño event would typically bring some upside price risk for cocoa, though this is not yet reflected in forward prices.

Cocoa arrivals at Ivory Coast ports reached 1,423 million tonnes by end-March, running 1.2% below the same point last season, though weekly volumes are closing the gap and a final end-of-season total above last year remains possible.

Easter shrinkflation returns

Easter shrinkflation featured in headlines again in 2025 and has returned as a theme in 2026. With much of this year’s Easter stock produced using high cocoa input costs, smaller and more expensive seasonal products are straightforward to explain, even if they represent a difficult reality for consumers.

Smaller formats are also aligned with the increased adoption of GLP-1 medications, which is shifting consumption toward lower volumes and higher quality. Despite the headlines, overall volume growth for Easter chocolate is expected to be resilient, with increases concentrated in smaller formats and premium products.

The Q1 grind and what comes next

Market attention is now on the Q1 grind update, due for release on 16 April. Expectations are for volume declines: around 5% in Europe, with potentially more pronounced weakness in Asia (around 10% down). North American demand is expected to show only marginal declines year on year.

Lower throughput during Q1 and Q2 reflects the fact that beans purchased by processors during this period were still acquired at relatively high prices, keeping purchasing volumes to a minimum. A recovery in processing volumes is expected in H2, once the impact of the substantial decline in cocoa bean prices filters through.


Read the full chocolate forecast in our chocolate H2 Outlook report: https://vespertool.com/download/chocolate-h2-2026-market-outlook/