Dollar Weakness Sparks Short Covering in Cocoa Futures

March ICE NY cocoa (CCH26) on Tuesday closed up +85 (+1.95%), and March ICE London cocoa #7 (CAH26) closed up +13 (+0.42%).

Cocoa costs moved larger on Tuesday as a plunge within the greenback index (DXY00) to a virtually 4-year low has sparked brief masking in cocoa futures.  Nonetheless, beneficial properties in London cocoa are muted after the British pound (^GBPUSD) rallied to a 4.25-year excessive on Tuesday.  The stronger pound weighs on cocoa priced in sterling phrases.  

Don’t Miss a Day: From crude oil to espresso, join free for Barchart’s best-in-class commodity evaluation.

Additionally, West African producers are holding again provides on account of low costs.   Monday’s cumulative information confirmed that Ivory Coast farmers shipped 1.20 MMT of cocoa to ports within the present advertising and marketing 12 months (October 1, 2025, by means of January 25, 2026), down -3.2% from 1.24 MMT in the identical interval a 12 months in the past.  The Ivory Coast is the world’s largest cocoa producer.  

Final Friday, NY cocoa sank to a 2-year nearest-futures low, and London cocoa plunged to a 2.25-year nearest-futures low amid ample world provides and falling demand.  The Worldwide Cocoa Group (ICCO) reported final Friday that 2024/25 world cocoa shares rose +4.2% y/y to 1.1 MMT.

Demand issues have just lately hammered cocoa costs as shoppers proceed to balk on the excessive value of chocolate.  On Wednesday, Barry Callebaut AG, the world’s largest bulk chocolate maker, reported a -22% decline in gross sales quantity in its cocoa division for the quarter ending November 30, citing “unfavourable market demand and a prioritization of quantity towards higher-return segments inside cocoa.”

Grinding reviews additionally confirmed weak demand.  On December 15, the European Cocoa Affiliation reported that This fall European cocoa grindings fell -8.3% y/y to 304,470 MT, a much bigger decline than expectations of -2.9% y/y and the bottom for a This fall in 12 years.  On December 16, the Cocoa Affiliation of Asia reported that This fall Asian cocoa grindings fell -4.8% y/y to 197,022 MT.  Additionally, the Nationwide Confectioners Affiliation reported This fall North American cocoa grindings rose solely +0.3% y/y to 103,117 MT.

Favorable rising situations in West Africa are additionally weighing on cocoa costs.  Tropical Basic Investments Group just lately mentioned that favorable rising situations in West Africa are anticipated to spice up the February-March cocoa harvest within the Ivory Coast and Ghana, as farmers report bigger and more healthy pods in contrast with the identical interval final 12 months.  

Chocolate maker Mondelez just lately mentioned that the newest cocoa pod depend in West Africa is 7% above the five-year common and “materially larger” than final 12 months’s crop.  Harvest of the Ivory Coast’s major crop has begun, and farmers are optimistic about its high quality.

Since posting a ten.5-month low of 1,626,105 baggage on December 26, ICE-monitored cocoa inventories held in US ports have rebounded, a bearish issue for costs.  ICE cocoa inventories climbed to a 2.5-month excessive of 1,773,618 baggage on Tuesday.

Smaller cocoa provides from Nigeria, the world’s fifth-largest cocoa producer, are supportive for costs.  Nigeria’s November cocoa exports fell -7% y/y to 35,203 MT.  Nigeria’s Cocoa Affiliation tasks that Nigeria’s 2025/26 cocoa manufacturing will fall by -11% y/y to 305,000 MT from a projected 344,000 MT for the 2024/25 crop 12 months.  

Cocoa costs have assist on a tightening world provide outlook.  On November 28, the Worldwide Cocoa Group (ICCO) reduce its world 2024/25 cocoa surplus estimate to 49,000 MT from a earlier estimate of 142,000 MT.  It additionally lowered its world cocoa manufacturing estimate for 2024/25 to 4.69 MMT from 4.84 MMT beforehand.  As well as, Rabobank final Tuesday reduce its 2025/26 world cocoa surplus estimate to 250,000 MT from a November forecast of 328,000 MT.

On Might 30, the Worldwide Cocoa Group (ICCO) revised its 2023/24 world cocoa deficit to -494,000 MT, the biggest deficit in over 60 years.  ICCO mentioned 2023/24 cocoa manufacturing fell by -12.9% y/y to 4.368 MMT.  ICCO on December 19 estimated a 2024/25 world cocoa surplus of 49,000 MT, marking the primary surplus in 4 years.  ICCO additionally mentioned world cocoa manufacturing in 2024/25 rose by +7.4% y/y to 4.69 MMT. 

On the date of publication,

Wealthy Asplund

didn’t have (both straight or not directly) positions in any of the securities talked about on this article. All info and information on this article is solely for informational functions.

For extra info please view the Barchart Disclosure Coverage

right here.

The views and opinions expressed herein are the views and opinions of the creator and don’t essentially mirror these of Nasdaq, Inc.