Cocoa Futures Rally Amid Dollar Weakness and Supply Concerns

July ICE NY cocoa (CCN26) closed +103 (+2.73%) while July ICE London cocoa #7 (CAN26) rose +86 (+2.98%), reaching a 1.5-week high. The dollar index ($DXY) hit a weekly low, boosting commodity prices.

Cocoa prices surged due to dollar weakness triggering short-covering. Funds held 27,286 net-short positions in NY cocoa, the highest in over three years. Meanwhile, Ivory Coast reported 260,000+ MT more cocoa than expected at ports, with 2025/26 production down -10.8% to 1.65 MMT.

Weather risks add support: Japan’s Meteorological Agency confirmed an El Niño pattern, potentially harming West African cocoa. NOAA predicts a 67% chance of a “Super El Niño,” worsening conditions. Preliminary 2026/27 crop surveys also show reduced cherelle formation, indicating a weak harvest.

Rising inventories (2.9M bags) and geopolitical factors—like the Strait of Hormuz closure disrupting supplies—further bolster prices. Global demand remains mixed: North American grindings fell -3.8% YoY, while Europe saw an 8% decline. Asian markets, however, grew +5.2%, offsetting some bearish trends.

Nigeria’s exports dropped -20% YoY, with production projected to fall -11%. Ghana and Ivory Coast both cut farmer prices mid-season, intensifying supply pressures. Analysts like StoneX revised 2026/27 surplus estimates downward to 149,000 MT, citing El Niño risks.

On the date of publication,

Rich Asplund

did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes.

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