What to Expect from the 2026/27 Cocoa Season - Part 2
- Diego Miranda
- 1 hour ago
- 4 min read
Introduction
The 2026/27 cocoa season is about to begin, promising to shake the foundations of the global markets once again.
In the first part of this blog series, we walked through the possible 2026/27 weather scenarios caused by the current El Niño, and how they could affect the West African and South American crops. We also saw the current state of these origins, contrasting how they have fared in the last few seasons with what we can expect from them in the future.
For the second part, we will now investigate the other side, seeing how consumption is shaping up to be in the next season. From there, we will look into the possible impact on cocoa stocks, and the possible consequences for the market as a whole.
Faltered Recovery
Tighter 2026/27 supply could be largely offset by weaker demand if prices remain elevated, leaving the market balance far closer to neutral than the supply outlook suggests.
While the supply context contrasts the precarious moment in West Africa with the optimism in South America, demand in 2026/27 will be all about timing, and how different regions have reacted and will react to price volatility.
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Although European consumption remains fragile, with grindings falling 4.6% YoY in Q2 2026, North America, Asia, and West Africa have all reported higher processing figures recently. Overall, these results suggest demand was beginning its recovery process after being crushed by high prices. This was visible mainly through the regions that respond more quickly to market changes, due to their lower dependence on hedging and other financial mechanisms, as well as consumer habits that are more responsive to short-term price volatility.
Now, though, the situation has become more complex once again. While the 2023/24 crisis took much of the market by surprise, financial players and institutions have moved ahead of a possible shortage this time, with prices rallying before the first 2026/27 pods were even harvested.
If prices remain at this level, we might see demand falter already at the beginning of next season, partially counterbalancing the lower supply. As a result, the balance could be closer to neutral, instead of the 500 MMT deficit we saw a few years ago.
Rebuilding Stocks
Certified stocks are currently comfortable, but they might decline next season because of the smaller crop. However, if high prices weaken demand, the drawdown could be relatively small.
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Inventories are where the bullish and bearish cases collide most directly. On one side, they have already shown a substantial recovery, with ICE certified stocks surpassing 3 million bags, their highest level in two years. That rebuild is the single strongest argument for lower prices, and it explains why the market has repeatedly sold off on inventory news through 2026.
That said, these results come with an important caveat. The current buffer has been rebuilt as much by collapsing demand in 2025/26 as by surging supply. A cushion that exists because grindings fell is far more precarious than one built on abundant harvests.
With the 2026/27 season promising a substantially lower crop, it is very likely we will see declining stocks by the end of the year. Whether the current amount will be enough to compensate for the poor harvest, though, depends mainly on how much consumption will be affected by the price level.
If demand falters already at the beginning of next season, stocks may see only a marginal reduction. On the other hand, if a decline takes longer to consolidate, similar to what happened after the 2023/24 shock, then we might see inventories falling as low as they were a couple of years ago, below 1.5 million bags.
What Everyone Wants to Know
So far, we have commented on all the most relevant matters regarding the 2026/27 season. But what everyone wants to know is, what does this mean for cocoa prices?
As always, with cocoa, the answer to such a question is not so simple. Initially, the obvious conclusion is that the possible shortage caused by the El Niño might lead to a new cocoa rally, as big or maybe even bigger than what was seen in 2023/24. This is also supported by the fact that cocoa prices have already rallied, surpassing $6,000/MT and reaching their highest level in over a year.
This possibility, real though it is, cannot be taken as certain. Not only are the full effects of El Niño in West Africa still unknown, but South America as a region is completely different from what it was three years ago. While the nations there could only be considered minor origins once, now they represent a force to be reckoned with in the cocoa world, especially Ecuador, that is currently fighting for the position of the second-biggest global producer.
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Not only supply, but the demand scenario can also be very different from what it once was. As we mentioned, the fact that prices rallied before the shortage can lead to a demand shock at the same time that the beans disappear. If that does happen, it might considerably limit how much room prices have to rise. Ironically, the early rally this year might be just what stops an even bigger one from happening in the next one.
All that, of course, will also depend on how stocks react. The same reason predicting the cocoa markets is never an easy task is why it's never a boring one.
Conclusion
The 2026/27 season promises to completely overhaul the foundations of the global cocoa market once again. From the possibility of another production shock in West Africa to the continued surge of Latin American producers and the possible early decline in consumption, the many drivers are pulling in all directions, making it almost impossible to know exactly what the outcome will be.
The only thing we can be sure of is that, as always, cocoa markets will remain surrounded by volatility, chaos, and emotion, with new surprises around every corner.
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