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May ICE NY cocoa (CCK26) on Monday closed up +32 (+0.99%), and May ICE London cocoa #7 (CAK26) closed up +28 (+1.16%).
Cocoa prices recovered from early losses and settled higher on Monday, with NY cocoa posting a 1-week high. The dollar ($DXY) gave up an early advance and turned lower on Monday, sparking short covering in cocoa futures and pushing prices higher.
The closure of the Strait of Hormuz is also supportive for cocoa prices as it has reduced fertilizer supplies, boosted global shipping rates, insurance costs, and fuel prices, thereby raising cocoa importers’ costs.
An excessively short position by funds in New York cocoa could add fuel to any short-covering rally. Last Friday’s weekly Commitment of Traders (COT) report showed funds boosted their short position in NY cocoa by 1,900 net short positions in the week ended April 7 to 16,368, the most in more than 3 years.
Larger cocoa supplies from the Ivory Coast are bearish for prices. Monday’s cumulative data from the Ivory Coast showed that farmers shipped 1.46 MMT of cocoa to ports in the current marketing year (October 1, 2025, through April 12, 2026), up +0.7% from 1.45 MMT in the same period a year ago.
Ample supplies are also bearish for cocoa prices, as ICE cocoa inventories rose to a 19.5-month high of 2,610,453 bags on Monday.
Last Tuesday, NY cocoa fell to a 5-week low, and London cocoa dropped to a 2-week low on signs of weak chocolate demand. According to Bloomberg Intelligence, early estimates for chocolate candy sales this Easter holiday, a prime seasonal time for chocolate consumption, are tracking toward a decline of about -5% from last year.
On April 1, NY cocoa climbed to a 3.5-week high as recent rainfall in West Africa has been insufficient to ease drought concerns in the Ivory Coast and Ghana. According to the African Flood and Drought Monitor, as of March 29, drought conditions blanket more than half of the Ivory Coast and about two-thirds of Ghana.
Last month, Ghana cut the official price it pays its cocoa farmers by nearly 30% for supplies for the 2025/26 growing season, and the Ivory Coast also said it would cut cocoa farmer pay by 57% that would kick in for the mid-crop harvest that started this month. The Ivory Coast and Ghana produce more than half of the world’s cocoa.
Demand concerns have hammered cocoa prices as consumers continue to balk at the high price of chocolate. On January 28, Barry Callebaut AG, the world’s largest bulk chocolate maker, reported a -22% decline in sales volume in its cocoa division for the quarter ending November 30, citing “negative market demand and a prioritization of volume toward higher-return segments within cocoa.”
Grinding reports also showed weak demand. On January 15, the European Cocoa Association reported that Q4 European cocoa grindings fell -8.3% y/y to 304,470 MT, a bigger decline than expectations of -2.9% y/y and the lowest for a Q4 in 12 years. On December 16, the Cocoa Association of Asia reported that Q4 Asian cocoa grindings fell -4.8% y/y to 197,022 MT. Also, the National Confectioners Association reported Q4 North American cocoa grindings rose only +0.3% y/y to 103,117 MT.
Also undercutting cocoa prices are higher exports from Nigeria, the world’s fifth-largest cocoa producer. On February 17, Bloomberg reported that Nigerian Dec cocoa exports rose +17% y/y to 54,799 MT. Nigeria’s Cocoa Association projects that Nigerian cocoa production in 2025/26 will fall by -11% y/y to 305,000 MT, from a projected 344,000 MT for the 2024/25 crop year.
On the bullish side, the Ivory Coast said its cocoa production in 2025/26 would fall -10.8% y/y to 1.65 MMT from 1.85 MMT in 2024/25. On February 10, Rabobank cut its 2025/26 global cocoa surplus estimate to 250,000 MT from a November forecast of 328,000 MT.
As a bearish factor, the International Cocoa Organization (ICCO) on March 2 raised its global 2024/25 cocoa surplus estimate to 75,000 MT from 49,000 MT in November, which was the first surplus in four years. ICCO estimated that global cocoa production in 2024/25 climbed by +8.4% y/y to 4.7 MMT. Looking ahead, StoneX on January 29 forecasted a global cocoa surplus of 287,000 MT in the 2025/26 season and a 267,000 MT surplus for 2026/27.
