The mood at Cocoa Week London was not what most delegates arrived expecting. Industry participants came in focused on weak chocolate confectionery demand and still-elevated retail prices. They left more concerned about supply. The catalyst was El Nino.

The US Climate Prediction Center puts an 82% probability on El Nino developing between May and July 2026, with a 96% chance it persists through the Northern Hemisphere winter. El Nino historically brings warmer, drier conditions to West Africa, stressing cocoa trees and reducing yields. Bloomberg analysis shows mean cocoa futures returns of close to 15% during El Nino events, with meaningful right-tail upside risk. At the industry events, Touton presented a 400,000 tonne bean surplus for the current 2025/26 crop year; Steve Wateridge put the surplus at 280,000 tonnes, adding that an intense El Nino could swing that into a deficit.

Futures markets moved immediately. July London futures rallied 15.8% and July New York contracts gained 16.3% during Cocoa Week. The combined Managed Money short position in London and New York then fell 37%, dropping from roughly 54,000 lots to 34,000 lots net short by the cutoff date of May 12. Despite that, four consecutive losing sessions followed the initial rally, and as of writing, prices were down a further 6%.

Structural risks in origin have not gone away. In Ivory Coast, farmers are protesting over unpaid beans from the main crop, with some selling at mid-crop prices of around 1,300 CFA francs per kilogram because the material is deteriorating. Police tear-gassed protesters in M’Batto as they blocked roads demanding payment. Ivory Coast’s cocoa grind rose 22% year-on-year in April to 46,578 tonnes, according to GEPEX, though total season-to-date grindings remain slightly below the prior year.

In Ghana, the Produce Buying Company is having vehicles seized by a consortium of creditor banks over roughly USD 22.7 million in unpaid debts. PBC’s share of domestic cocoa purchases has fallen from around 30% to under 5%. Ghana plans to raise USD 1 billion through bond issuances from July to fund purchases for the 2026/27 season.

The full Vesper cocoa report covers COT positioning, Ivory Coast arrivals, Ghana’s financing challenges, and the El Nino outlook through the 2026/27 crop season.


For the full cocoa market analysis, visit: https://app.vespertool.com/market-analysis/3006