Cocoa is down by 5%

Cocoa futures eased to below $4,200 per tonne but stayed close to recent 3-month highs, supported by receding short covering while fundamentals stayed broadly supportive. Rising geopolitical tensions in the Middle East, including disruptions in the Strait of Hormuz, have pushed up energy and transportation costs, increasing fertilizer prices and tightening global agricultural supply chains. This is raising concerns over output in key West African producers, particularly Ivory Coast. Meanwhile, Ghana’s cocoa sector has been under strain, with difficulties in selling beans and paying farmers amid ample global supply, weaker prices, and softer demand. The government plans to raise $1 billion through domestic bond issuance to finance cocoa purchases ahead of the 2026/27 crop season, as it seeks to restructure cocoa financing after recent debt pressures. The risk of El Niño returning is also adding to production concerns for the next harvest.

Cocoa decreased 5% to 4205.78 USD/T

Cocoa futures rose further to breach $4,400 per tonne, the highest level since late January, fueled by fund short covering and growing supply risks. While weather conditions in West Africa, particularly in the Ivory Coast and Ghana, have recently improved, supporting short-term output and allowing for a gradual rebuilding of global stocks, the outlook remains uncertain. Irregular rainfall during the key mid-crop season continues to pose risks, especially if dry spells persist and affect yields and bean quality in the latter stages of the harvest. Moreover, fertilizer shortages and the rising likelihood of the El Niño phenomenon are expected to constrain 2026/27 production, with farmers in top grower Ivory Coast already reporting difficulties securing inputs amid cash constraints. Reflecting this, StoneX has lowered its global cocoa surplus forecasts for both 2025/26 and 2026/27, signaling tighter supply conditions. On the demand side, conditions remain subdued.