March 26, 2026 — Cocoa futures prices recovered from early losses in recent trading, moving higher as oversold market conditions triggered technical short covering by funds. The rebound comes despite a backdrop of bearish fundamental factors, including expectations for a strong West African harvest and continued weak global demand.
Market Movement and Technical Factors
December ICE NY cocoa futures recently posted gains, reversing a slide toward 1.75-year lows. Analysts attributed the upward move primarily to technical factors rather than a shift in underlying supply and demand. Market data indicated funds engaged in short covering, buying back contracts to close out bearish positions following the commodity’s extended decline.
This activity provided temporary support, lifting prices from their lowest levels in nearly two years. The rally was viewed by market observers as a technical correction within a broader bearish trend.
Bearish Fundamentals Weigh on Market
The price recovery faces significant headwinds from fundamental reports. Expectations for a bumper cocoa crop in West Africa, the world’s primary growing region, have pressured the market. Reports from Ivory Coast indicated cocoa trees are in good health, with recent dry weather aiding the drying of harvested beans.
In Ghana, farmers reported favorable weather allowing cocoa pods to develop quickly. Confectionery giant Mondelez stated that the latest cocoa pod count in West Africa is approximately 7% above the five-year average and “materially higher” than the previous year’s crop. The harvest of Ivory Coast’s main crop is underway, with farmers expressing optimism about its quality.
Demand and Inventory Data
Global cocoa demand remains a persistent concern for bulls. The CEO of Hershey previously described chocolate sales during a recent Halloween season as “disappointing.” Halloween historically accounts for nearly 18% of annual U.S. candy sales.
Industry association data painted a mixed but largely weak picture. The Cocoa Association of Asia reported that third-quarter 2025 cocoa grindings fell 17% year-over-year to 183,413 metric tons, the smallest volume for a third quarter in nine years. The European Cocoa Association reported a 4.8% year-over-year decline in Q3 grindings to 337,353 MT, the lowest for a third quarter in a decade.
While the National Confectioners Association reported a 3.2% year-over-year increase in North American Q3 grindings, it noted the addition of new reporting companies skewed the data. Research firm Circana reported North American chocolate candy sales volume was down more than 21% in a 13-week period ending in early September 2025 compared to the same period a year earlier.
Supply-Side Support and Policy Impact
Some supportive factors exist within the complex. ICE-monitored cocoa inventories held in U.S. ports recently fell to an eight-month low. Export data from Ivory Coast showed farmers shipped approximately 516,787 MT of cocoa to ports from October 1 through mid-November 2025, a 5.7% decrease from the same period a year earlier.
Production in Nigeria, the world’s fifth-largest cocoa producer, is projected to fall. The Nigeria Cocoa Association projects 2025/26 production will decline by 11% year-over-year to 305,000 MT.
Policy changes have also influenced the market. The previous U.S. administration’s removal of a 10% reciprocal tariff on commodities not grown domestically, including cocoa, exerted additional downward pressure on prices.
Long-Term Structural Outlook
The International Cocoa Organization (ICCO) has provided critical long-term context. In a May 2025 report, the ICCO revised its estimate for the 2023/24 global cocoa deficit to 494,000 MT, calling it the largest deficit in over 60 years. It reported 2023/24 production fell 13.1% year-over-year, pushing the global cocoa stocks-to-grindings ratio to a 46-year low.
However, the organization estimated a shift to a global surplus of 142,000 MT for the 2024/25 season, which would be the first surplus in four years. It projected global production would rise 7.8% year-over-year to 4.84 million metric tons for that period.
Market Analysis and Path Forward
The recent price action highlights the tension between short-term technical trading and longer-term fundamental trends. The bounce from multi-year lows suggests some traders see limited near-term downside, prompting profit-taking on short positions.
Market participants are now monitoring West African harvest progress and final yield data. Continued favorable weather could cement expectations for ample supply, while any disruptions could quickly alter the balance. Demand signals from major consuming regions in Asia, Europe, and North America will also be critical in determining whether the recent rebound can be sustained or if prices will resume their downward trajectory toward the lows seen earlier this month.
For more information on commodity market data, visit the Intercontinental Exchange or review public reports from the International Cocoa Organization.
This article was produced with AI assistance and reviewed by our editorial team for accuracy and quality.
