2026-05-08

Cocoa Prices Rebound to 3-Month High as StoneX Cuts 2026/27 Surplus Forecast

Cocoa futures climbed to $4,359 per metric tonne on May 7, 2026, up 5.42% in a single session and 33% over the past month. The rally takes prices to their highest level since February and reverses much of the sharp decline that defined Q1.

The trigger? StoneX cut its 2026/27 global cocoa surplus forecast to 149,000 metric tonnes — down from 267,000 MT projected in January. Combined with growing weather concerns in West Africa and the prolonged Strait of Hormuz disruption, the cocoa market has shifted from "ample supply" narrative back to "tightening risk" in a matter of weeks.

What Drove the Rally

Three factors converged to push prices higher:

StoneX surplus forecast cut. The 2026/27 surplus estimate fell to 149,000 MT from 267,000 MT, citing risks to the West African crop from an expected El Niño weather event. The 2025/26 surplus was also trimmed to 247,000 MT from 287,000 MT.
West African crop concerns. Drought conditions still cover roughly two-thirds of Ghana and over half of Côte d'Ivoire, according to the African Flood and Drought Monitor. Early surveys for the 2026/27 main crop showed below-average cherelle formation — an early indicator of weak pod development.
Short-covering pressure. Funds had built up an 8-year extreme net-short position in London cocoa (33,827 contracts), making the market structurally oversold. The dollar's weakness triggered a forced unwind.

Demand Side: Mixed Signals

The demand picture is no longer uniformly weak. Q1 2026 grinding data showed:

Region	Q1 2026 Grindings	Year-on-Year Change
Europe	325,895 MT	−7.8%
North America	106,087 MT	−3.8%
Asia	223,503 MT	+5.2%

Europe printed its lowest Q1 grindings in 17 years. Asia, however, surprised to the upside — beating market expectations of a 6.7% decline. The pattern suggests demand is shifting geographically rather than collapsing across the board.

What This Means for Cocoa Butter and Cocoa Liquor Buyers

Cocoa butter and cocoa liquor prices follow the bean market, but with their own dynamics. As the bean rally gains traction, butter and liquor pricing typically respond within 2–4 weeks. For buyers who locked in supply during the Q1 lows ($2,886 in late February), the timing was favorable. Buyers who delayed purchasing in expectation of further price drops now face a more difficult decision.

Three scenarios to plan around:

Surplus materializes as forecast. If weather normalizes and El Niño impact stays contained, prices may retreat back toward the $3,000–$3,500 range over Q3.
Drought persists into main crop window. If West Africa's drought continues through the September–October critical window, the surplus narrows further. Prices could push back above $5,000.
Demand stabilizes faster than expected. If Asian growth continues and European grindings stabilize, the surplus shrinks from the demand side as well — adding upward price pressure.

For chocolate manufacturers and confectionery producers, this is a classic risk-management moment. Locking in cocoa butter and cocoa liquor contracts at current levels — especially for production needs through Q3 — provides cost predictability against further upside risk. Buyers focused only on chasing lower prices may end up paying more if the rally extends.

Structural Risk Has Not Gone Away

The fundamental setup of the cocoa market remains fragile. West Africa still produces roughly 70% of global cocoa. Côte d'Ivoire alone supplies about 40%. Aging trees, fertilizer access constraints, and concentrated geography mean the market is one weather event away from another supply shock.

The 2024 spike to $12,931 per tonne is fresh in memory. Manufacturers who built reformulation strategies during that crisis — using cocoa butter equivalents (CBE), cocoa butter substitutes (CBS), or reducing cocoa content — have largely kept those changes in place. This means demand has structurally adjusted, but it also means the industry has less buffer if supply tightens again.

For B2B cocoa buyers, the practical takeaway is to treat the current rally as a signal to review supply contracts, not to wait for the next price floor. Working with a manufacturer that controls the full processing chain — from bean sourcing to cocoa butter pressing and cocoa liquor production — provides more predictable pricing and supply continuity than relying on spot-market intermediaries during volatile periods.

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Author

Huanda Cocoa Team

Cocoa Processing & Technical Team, Huanda Cocoa

Our team has been in cocoa processing and global trade since 2005. We produce cocoa powder, butter and liquor at our own FSSC 22000 certified facility, serving food manufacturers across 62 countries.

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