Cocoa
Cocoa
Price movements (monthly)
ICE NY Cocoa
Month-on-month Change
Year-on-year Change
ICE London Cocoa
Month-on-month Change
Year-on-year Change
- New York nearby cocoa futures fell by -9%, mirroring the falls in London, after the release of weak grind data on 17th July. However, prices were +5% higher yoy.
- Similar to London, the structure of the market in New York has also become weaker with the CCc1/CCc6 switch ending at +$1,305, moving from +$1,708 the previous month.
- The arb (New York – London) narrowed basis the second position (Z25), moving from +$516 at end June to +$427 at the end of July.
- London front month contract prices fell -8% over the month, bottoming out on July 17 before recovering in the second half of the month.
- The structure of the market in London has become weaker with the LCc1/LCc6 switch ending the month at +£485, moving from +£806 the previous month.
Cocoa
Price drivers
Commitment of Traders
Funds in London reduced their net long cocoa position in July, covering 6,500 lots during the month. In New York funds added 2,000 lots to their net long position. Funds ended the month with a net long position of 26,000 lots over both markets.
Commitment of Traders
The Open Interest (excluding spreads) in NY has increased from 72,600 lots in end-June to 75,000 lots as of 29th July but remains at a historically very low level..
Cocoa
Price forecast
Cocoa prices have dropped over 20% since the middle of May. A lot of what is causing the significant fluctuation in prices is updates on the weather outlook in West Africa's key cocoa-growing regions. Concerns remain that the top grower Ivory Coast, may have a third consecutive poor crop in the 2025/26 season. The fluid situation regarding the coming supply means that establishing a fundamental basis for forecasting is tricky. Overall, our models suggest that prices are too high, but this does not mean prices cannot increase, especially if the weather situation in West Africa were to change. Seasonally, prices tend to decline into early Q3, which suggests that cocoa prices might be close to a temporary low.
From a technical perspective, prices are currently in a volatile sideways trend, highlighted by the two trend lines. From a long-term perspective, prices are beginning the early stages of a downtrend. This suggests we are unlikely to see the highs of late 2024 broken. That being said, we expect the volatility to continue, and there may well be an opportunity to hedge an increase after the seasonal low is in place.
Cocoa
Market sentiment (for the month ahead)
Tight global stocks
There are some discrepancies among market players regarding forecasts for final ending stocks, with some estimates coming out higher than last year. Sources expect purchasing/tenders throughout the marketing year to dictate the final figure and any price movement that could come as a result.
↓ Increased Global production
Global barley production is forecasted by the USDA to increase by 2.4 million mt to a total of 145.8 million mt in the 2025/2026 season. Market players say that the expected jump in production is due to a rebound from adverse weather conditions in the previous marketing year. Sources stated that better soil moisture in Russia and consistent rainfall in most of Europe (although northern parts are becoming a concern) drove production estimate increases in 2025/2026. Sources say that if trends of increasing production continue, it could weigh on prices.
↑ Dryness in Ukraine
Sources say that between March and June, Ukraine experienced substantial precipitation deficits, with below usual rainfall throughout the period and unexpected frosts in May driving concerns in the market. As a result, the USDA has forecasted a slightly smaller crop in Ukraine (see page 5) . Furthermore, sources believe that China’s demand for Ukrainian barley will increase in the 2025/2026 season, citing purchases of around 500,000 mt (as of May 22). Market participants believe that this could lend some support to prices.
↑ Increased demand
Market players believe that among the top importers, there will be a push to secure supplies in the 2025/2026 season. Industry insiders believe that China are likely to increase purchases to replenish stockpiles, and that this could also be the case for Turkey, as domestic production is expected to decrease and imports are projected from the USDA to increase by up to 850,000 mt in 2025/2026. Market players suggest that this could lend some support to prices, provided that decreased demand from the Middle East, due to higher corn availability for feed as opposed to barley, does not offset potential demand increases from China or Turkey.
↑ World Barley Stocks Lowest since 2005/2006
According to market players, 2024/2025 Global barley stocks are still expected to conclude at their lowest level since 2005/2006. Sources believe that this is due to barley prices remaining competitive throughout the season despite smaller (2024/2025) global harvests. For 2025/2026, ending stocks are projected at the same level amid a slight uptick in production. Market players believe that increases in demand, alongside a tighter balance sheet, could lend support to prices.
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