Cocoa futures recovered on Thursday from their lowest levels in two and a half weeks, snapping a prolonged losing run as oversold market conditions triggered a wave of short covering that lifted prices on both New York and London exchanges.
May ICE New York cocoa futures closed up 2.18 percent on Thursday, while May ICE London cocoa closed up 2.16 percent, ending a steady retreat that had kept prices under pressure for the better part of two weeks.
The selloff that preceded Thursday’s bounce reflected growing confidence in the West African supply outlook. Farmers across both Ghana and the Ivory Coast have reported that consistent rains have strengthened pod development on cocoa trees, feeding expectations of a sizeable harvest. Inventories in certified warehouses have reflected that optimism, with ICE cocoa stocks climbing to a 7.5-month high.
The oversupply narrative has been reinforced by the farmgate pricing adjustments made by the two countries that together account for more than half of global cocoa output. Ghana reduced its official producer price by nearly 30 percent in February to realign with international market realities, while the Ivory Coast implemented a 57 percent cut to its mid-crop rate effective March 2026, both moves designed to clear mounting unsold stockpiles at ports.
Despite the bearish supply backdrop, the Strait of Hormuz conflict is providing a floor of support for cocoa prices. The closure of the waterway, through which roughly 20 percent of the world’s traded oil and liquefied natural gas passes, has driven up global shipping rates, insurance costs and fuel prices, raising the effective cost of importing cocoa for processors worldwide.
Demand concerns remain a persistent headwind. Barry Callebaut AG, the world’s largest bulk chocolate maker, reported a 22 percent decline in cocoa division sales volume for the quarter ending November 30 2024. European cocoa grindings fell 8.3 percent year on year in the fourth quarter of 2024, the weakest fourth-quarter reading in 12 years, while Asian grindings declined 4.8 percent over the same period. Consumers have pulled back sharply on chocolate purchases in response to elevated retail prices, a demand destruction cycle that analysts say may take several seasons to fully reverse.
Adding further supply-side weight, deliveries of cocoa to Ivory Coast ports in the current marketing season running from October 1 2025 through late March 2026 have come in below year-ago levels, offering modest price support at the margin.
Thursday’s recovery did not alter the broader market consensus. Multiple forecasters project global cocoa surpluses extending through the 2025/26 and 2026/27 seasons, and year-end median forecasts have New York cocoa futures closing 2026 at around $3,350 per tonne, reflecting limited upside from current levels.
