Cocoa prices took a significant hit on Wednesday, with May ICE NY cocoa closing down 2.25% and London cocoa down 2.14%. The decline follows a recent rally that prompted hedge selling among producers and traders, despite strong forward sales from the Ivory Coast, which surged to 800,000 MT for the 2026/27 season. Market sentiment has been pressured by weak chocolate demand, with early estimates indicating a potential 5% decline in Easter chocolate sales compared to last year.
The bearish outlook is compounded by rising cocoa supplies and record-high ICE cocoa inventories, which reached a 19.75-month peak. Additionally, adverse weather conditions in West Africa have not alleviated drought concerns, further complicating the supply-demand dynamics. The recent increase in short positions among funds adds another layer of volatility, potentially setting the stage for a short-covering rally if prices stabilize.
Market professionals should closely monitor upcoming grinding reports and the evolving supply situation, as these factors will be critical in determining cocoa price trajectories and potential trading opportunities in the near term.
Source: nasdaq.com