12.11.2025 - Daily Cocoa Market Report

Cocoa futures extended their decline on Wednesday, with New York under renewed pressure following Tuesday’s deforestation-driven selloff, while London remained comparatively stable. The March 2026 New York contract closed at 5,744 USD, down from 5,888 USD on Tuesday (-2.45%). London’s March 2026 contract settled at 4,208 GBP, marginally above Tuesday’s 4,205 GBP close.

Converted at 1.315 USD/GBP, London’s settlement equals 5,536 USD, putting the NY–London arbitrage spread at +208 USD, sharply narrower than Tuesday’s +359 USD. The compression came almost entirely from New York weakness, not London strength, as traders engaged in spread unwinding—selling NY and modestly buying London after Tuesday’s outsized NY move.

Risk sentiment remained defensive. New York stayed hypersensitive to tariff speculation, macro signals, and algorithmic selling, while London benefitted from European hedging demand and improving expectations of a potential delay to the EU Deforestation Law.

Certified Stocks – November 12, 2025

The divergence remains notable: U.S. certified stocks continue a slow but persistent decline, while UK stocks hold steady. This structural contrast normally supports a wider NY–London spread, but speculative pressure in New York temporarily overwhelmed the underlying fundamentals.

Futures, Spreads & Term Structure

Key Futures Closings – March 2026

NY–London Spread (Mar 2026)

• +210 USD (after converting London to USD at 1.315)
• Down from +359 USD on Tuesday
• Driven primarily by NY selling vs. London buying

The sharp spread contraction shows traders preferred London as a defensive market while treating New York as the “pressure valve” for tariff fears and speculative selling.

Volume and Open Interest Analysis

Trading activity on Wednesday showed that the market is still very engaged with this selloff rather than losing interest. In New York, total cocoa futures volume rose to 44,557 lots, up from 40,666 on Tuesday and above the recent average. That confirms that the additional leg lower in prices was driven by active participation, fresh selling and short-term traders pressing momentum, rather than a thin, illiquid slide.

London volume reached 36,563 lots, almost unchanged from Tuesday’s 36,802. That stability matches the price behaviour: London March ticked slightly higher on the day while New York dropped, suggesting that most of the activity there was routine hedging and spreading rather than aggressive outright liquidation.

• US (NY Cocoa – CC)
  • Total volume: 44,557 lots (vs 40,666 Tuesday)
  • The increase points to renewed downside pressure, with speculative shorts and systematic traders reacting to tariff headlines and the break of recent support.
  • The higher volume on a down day fits a “sell-the-news” extension of Tuesday’s deforestation/tariff-driven move.
• UK (London Cocoa – C)
  • Total volume: 36,563 lots (vs 36,802 Tuesday)
  • Activity was steady rather than explosive, consistent with a market absorbing hedging flows and arbitrage rather than panic selling.
  • London’s small price gain versus flat volume underscores that it is behaving as the relatively defensive leg of the NY–London spread.

Open interest reinforces the idea that New York is where the speculative damage is being done. Recent data put NY cocoa OI around 120,765 contracts – higher than earlier in the month – which lines up with the Spanish newsletter’s observation that new short positions have been added into the decline. That’s not longs fleeing; it’s fresh bears leaning on the market.

In London, total open interest of roughly 163,231 contracts has been edging around the same zone seen earlier in November. This looks more like position adjustment and spread trading than an outright speculative attack, which matches the more muted price action there.

Taken together, the volume and OI picture is:

• New York – the epicentre of bearish momentum: higher volume on down days, rising or elevated OI, and news-driven short selling amplifying every technical break.
• London – the stabiliser: solid but not explosive volume, OI broadly steady, and price moves shaped more by hedging and arbitrage than emotional liquidation.

West Africa Supply & Farmer Sentiment

Field reports from Côte d’Ivoire and Ghana indicate continued improvement in pod development thanks to a favorable mix of sunshine and scattered showers. The drier spell earlier this month helped fermentation and drying, while new rainfall is supporting ongoing pod filling.

Estimated arrivals remain below last season, yet last week’s Ivory Coast figure (~107,000 tons) exceeded the ~90,000 tons reported a year earlier, suggesting that port congestion is easing. Farmers remain cautiously optimistic: weather has been supportive, but many warn that tree exhaustion and earlier fungal pressure may still cap the main crop at a level below pre-2022 averages.

Market participants continue to see the crop as improving but fragile, potentially adequate for Q1 2026, but still vulnerable to climatic shifts.

Harmattan Risk Assessment

Early-November meteorological indicators point to a weaker-than-normal Harmattan so far.

Short-term (1–2 weeks):

• Moist Atlantic air dominates
• Scattered showers continue
• No meaningful dryness or dust intrusions

Medium-term (late Nov – mid Dec):

• Models show gradual strengthening of northeasterly winds
• Still likely to remain below seasonal norms
• Risk to flowering and bean sizing remains low for now

Outlook:
Weather is currently bearish for prices, as beneficial moisture supports pod development. Traders will remain cautious, however, as Harmattan patterns can shift abruptly in early December.

Industry & Consumer Developments — Tariff Comments & Nielsen Data

Comments made earlier this week by US Treasury Secretary Bessent regarding “substantial announcements on tariffs in the coming days” triggered a notable wave of selling across the cocoa complex. Markets interpreted the remark as a signal that US import tariffs on cocoa could potentially be reduced to 0%, an outcome that would materially alter short-term flow dynamics.

A reduction to zero tariffs would open the door for an influx of Latin American beans, particularly from Ecuador into the New York terminal, where physical spreads have already collapsed and the exchange is paying over $80 premia for most origins. Such a shift would ease the current supply tightness in the US-deliverable system and weaken NY futures relative to London.

From the market’s perspective, this comment arrived at a highly sensitive moment. NY cocoa was already testing multi-month lows and struggling below key moving averages; the mere possibility of tariff relief acted as a catalyst for additional speculative selling, particularly from short-term algo-driven flows.

Nielsen’s confectionery data added another macro layer to the bearish tone. Their report for the period ending October 5th showed:

• Chocolate sales revenue up 7% YoY driven largely by higher retail prices
• Sales volumes down 8.5% YoY indicating clear demand elasticity

This revenue–volume divergence reinforces the idea that global chocolate consumption is being supported artificially by pricing, rather than by organic demand growth. For cocoa markets, this matters because:

1. Weak consumer volume reduces grinding margins.
2. Manufacturers are more reluctant to forward-buy raw cocoa when retail throughput is falling.
3. Demand-side tightness limits the market’s ability to absorb high nearby prices.

At the same time, the Nielsen report echoes patterns seen in Q3 earnings across major chocolate makers: revenues up, volumes down, and continued caution in forward hedging. This environment amplifies the sensitivity of cocoa futures to any supply-side loosening—such as tariff adjustments or better West African weather—explaining why prices reacted so sharply to Bessent’s comments.

Put bluntly, the Nielsen numbers show that consumers are already voting with their feet; if tariffs or weather add even a modest amount of extra supply into the system, the path of least resistance in the short term is still lower, not higher, despite all the talk of structural tightness.

Market Interpretation

Wednesday’s price action was driven predominantly by technical pressure, arbitrage selling, and post-tariff repositioning, rather than any deterioration in physical fundamentals. The divergence between NY and London highlights differing sensitivities: NY reacts more aggressively to macro shocks, while London trades more in line with European hedging and stock conditions.

With NY now trading near the 5,700–5,750 USD support band, further downside may emerge if volumes remain heavy. Conversely, reduced spread selling could allow stabilization.