Global cocoa prices are expected to stage a gradual recovery in the second half of 2026 as rising El Niño-related weather risks threaten supply conditions in West Africa, although subdued global demand is likely to cap sharper gains, according to BMI.
BMI forecasts second-month ICE-listed cocoa futures to average US$4,000 per tonne in 2026, down sharply by 50.3 per cent from the record annual average of US$8,042 per tonne in 2025.
However, the research house expects prices to strengthen progressively through the year, with quarterly averages projected at US$3,900-US$4,150 per tonne during the second half of 2026.
Cocoa futures settled at US$4,272 per tonne on May 14, bringing the year-to-date average to US$3,867 per tonne.
El Niño risks to support prices
BMI said the cocoa market has remained under bearish pressure since late 2025 following expectations of improving global supply after two consecutive seasons of severe deficits.
Nevertheless, the firm warned that markets may be underestimating the fragility of the expected supply recovery, particularly as attention shifts toward the 2026/27 crop season in West Africa.
According to the US Climate Prediction Center, there is an 82 per cent probability of El Niño conditions emerging between May and July 2026 and persisting through the Northern Hemisphere winter.
BMI noted that El Niño events historically reduce rainfall and increase temperatures across cocoa-growing regions in Côte d’Ivoire and Ghana, leading to weaker yields, lower soil moisture and higher pest and disease pressure.
“The market is likely to progressively reprice supply risks during the second half of 2026 as concerns over weather-related disruptions intensify,” the report said.
Demand remains weak but stabilising
Despite the improving price outlook, BMI said upside potential remains constrained by structurally weaker global demand after the cocoa price spike in 2024 and early 2025 prompted manufacturers to reformulate products with lower cocoa content.
The report noted that part of the demand destruction is likely permanent, limiting the possibility of prices returning to previous record highs purely on consumption recovery.
Still, there are early signs demand conditions may be stabilising.
Combined cocoa grindings in North America, Europe and Asia fell 3.1 per cent year-on-year in the first quarter of 2026 to 655,485 tonnes, a slower contraction compared with earlier quarters.
While European and North American grindings continued to decline, Asian grindings rose 5.2 per cent, supported by expanding middle-class consumption in the region.
BMI expects global cocoa demand to stabilise through the remainder of 2026, although consumption is unlikely to return to pre-crisis levels.
Supply surplus expected to narrow
BMI projects the global cocoa market to remain in surplus for a second consecutive season, although the excess supply is expected to narrow steadily.
The firm forecasts a surplus of 270,000 tonnes in the 2025/26 season after an estimated 374,000-tonne surplus in 2024/25. The surplus is then expected to narrow further to 109,000 tonnes in 2026/27.
In Côte d’Ivoire, the world’s largest cocoa producer, BMI expects production to reach around two million tonnes in 2025/26, lower than some revised industry estimates of 2.2 million tonnes due to lingering weather-related risks and quality concerns.
Production is forecast to decline again in 2026/27 to 1.7 million tonnes as El Niño risks and fertiliser supply disruptions linked to geopolitical tensions continue to weigh on output prospects.
Prices to stay above pre-crisis levels
Looking ahead, BMI forecasts cocoa prices to average US$4,150 per tonne in 2027 as weather-related supply concerns continue to support prices in the first half of the year.
However, prices are expected to ease later in 2027 as El Niño conditions dissipate and supply prospects improve.
The firm said cocoa prices are likely to remain structurally above pre-crisis levels but lack sufficient catalysts for a sustained rally beyond the US$4,000-US$4,300 per tonne range over the medium term.
BMI added that risks to its outlook remain tilted to the upside in the near term, particularly if El Niño conditions intensify or geopolitical tensions further disrupt fertiliser supplies and trade flows.
