Market analysis
This week, cocoa futures experienced a notable rebound, reversing a downward trend observed since the beginning of 2025. After reaching a historic high of nearly $13,000 per ton in December 2024, prices had declined to approximately $8,000 by early May. However, recent trading sessions saw prices climb back above $11,600 per ton, marking the highest levels in about a month.
Several factors contributed to this price resurgence:
Adverse Weather Conditions in West Africa: Ivory Coast, the world's leading cocoa producer, reported below-average rainfall during a critical period of the April-to-September mid-crop season. Regions like Soubre received only 0.8 mm of rain last week, significantly below the five-year average. Such conditions threaten the development of young cocoa pods, potentially reducing yields.
Declining Global Inventories: ICE-monitored cocoa inventories in U.S. ports have been steadily decreasing over the past 18 months, reaching a 21-year low of 1,292,153 bags as of January 16th. This decline indicates tightening supplies, which supports higher prices.
Structural Supply Challenges: Beyond immediate weather concerns, structural issues such as aging cocoa trees, the spread of diseases like the swollen shoot virus, and underinvestment in farm maintenance have plagued major producers like Ivory Coast and Ghana. These long-term challenges suggest that supply constraints may persist.
Market Dynamics and Speculation: The recent price increase also prompted short covering in cocoa futures, as traders who had bet on falling prices rushed to cover their positions amid the unexpected rally. Additionally, a weaker U.S. dollar made commodities priced in dollars more attractive to investors, further boosting cocoa prices.
In summary, the cocoa market's behavior this week reflects a complex interplay of immediate weather-related supply concerns, long-standing structural production issues, and market dynamics. While the recent price surge may offer short-term relief to producers, the underlying challenges suggest that volatility could persist in the foreseeable future.