Global cocoa prices have surged back above $4,000 per metric tonne following a sharp short squeeze that analysts say is reshaping how funds and commercial players are approaching the market, with supply concerns in West Africa adding fuel to one of the commodity sector’s most dramatic reversals in decades.
London cocoa posted its largest single-day gain since at least 1989, rising nearly 15% to above £3,080 per metric tonne. New York cocoa climbed back through $4,100. Trading volumes were exceptionally heavy, with more than 73,000 lots changing hands in London and over 71,000 in New York during the session.
The move came after a 24% rebound from recent lows broke through key technical resistance levels, catching speculative funds badly positioned. Commitments of Traders (COT) data show managed money had added roughly 7,000 to 8,000 lots of fresh short exposure across London and New York markets, pushing the combined speculative net short toward 58,000 to 60,000 lots. In New York alone, the net short reached nearly 20,000 lots, the largest bearish positioning recorded in more than three years. Once prices broke above resistance, discretionary buying rapidly converted into forced covering.
The rally carries more than speculative momentum. Open interest has expanded by an estimated 60,000 to 80,000 lots since February, with much of that growth attributed to renewed commercial participation from producers, grinders, merchants and industrial buyers, signalling broader market repricing rather than a purely speculative event.
Physical supply signals remain troubling. Arrivals from Côte d’Ivoire fell nearly 23% year-on-year in the latest weekly data, while agronomists are flagging weak cherelle formation in parts of West Africa ahead of the 2026/27 crop season. StoneX has trimmed its projected cocoa surplus in light of potential El Niño disruption. The International Cocoa Organization (ICCO) had estimated a 75,000-tonne global surplus as of February, far below earlier market forecasts of up to 247,000 tonnes.
Disease pressure is deepening the structural supply concern. The Cocoa Swollen Shoot Virus (CSSV) continues to spread across West African growing regions, with Ghana survey data showing approximately 31% of the country’s cocoa land affected in 2024, up sharply from 17% in 2017.
Demand-side data offers some counterbalance. European first-quarter grindings fell 7.8% year-on-year to 325,895 tonnes, while North American grindings declined 3.8% to 106,087 tonnes. Yet recent earnings results from Hershey and Mondelez indicate that consumer appetite for chocolate has remained more resilient than many expected despite elevated retail prices, limiting the bearish case on demand alone.
With the FCC London Cocoa Dinner scheduled for this Friday, traders anticipate that informal conversations and sentiment shifts around the event could amplify positioning moves in an already thin and volatile market. As one veteran broker observed this week, “terminal markets ultimately price only two things: greed and fear.”
CocoaRadar holds a neutral-to-bullish outlook over the next two to four weeks, noting that weather patterns, West African crop signals and short-covering risk continue to support prices. Weak grind demand may cap further gains unless crop deterioration becomes more pronounced.
