Cocoa Extends Recovery as El Niño Concerns Shift Focus to 2026/27 Crop (16 June 2026)

Cocoa futures extended their recovery on Tuesday, with the benchmark New York September 2026 contract settling at 4,234, up 262 points on the session. The market traded within a wide intraday range, reaching a high of 4,431 before easing into the close, while London September 2026 cocoa gained 189 points to settle at 3,157. The advance marked a second consecutive day of strong gains and pushed both markets to their highest levels since the recent correction began earlier this month. Buying interest was evident across the entire forward curve, with nearby and deferred contracts posting similar percentage gains, reflecting a broad improvement in market sentiment rather than contract-specific factors. Despite some profit-taking during the latter part of the session, cocoa retained most of its gains, suggesting that buyers remained active as traders reassessed the balance between improving West African arrivals and longer-term supply risks.

Additional support came from West Africa, where Ghana and Ivory Coast announced that the 2026/27 cocoa season will begin on 1 September and conclude on 31 August. The two countries, which together account for roughly 60% of global cocoa production, reaffirmed their commitment to coordinating policies and harmonizing producer pricing mechanisms. While the announcement does not immediately affect current-season supply, it underscores the close cooperation between the world's two largest cocoa producers at a time when the market remains highly sensitive to developments in the region.

Attention is increasingly shifting toward the outlook for the 2026/27 crop following the confirmation of El Niño conditions last week. Although arrivals and mid-crop performance have improved during the current season, traders are becoming more focused on the risks facing next year's production. Historically, El Niño episodes have been associated with weather disruptions across key cocoa-growing regions, raising concerns that the 2026/27 crop could underperform current expectations. At the same time, forecasts indicate widespread rainfall across Ivory Coast, Ghana, Nigeria and Cameroon over the next two weeks, supporting soil moisture and near-term crop development. However, market participants appear more concerned with the potential impact of El Niño later in the year, with uncertainty surrounding next season's production outlook continuing to provide underlying support for cocoa prices.

Futures Performance

The cocoa market extended its recovery sharply on 16 June, building on the gains recorded during the previous session and confirming that buying interest had broadened beyond a short-covering rebound. Across both New York and London futures, all major contracts closed substantially higher than their 15 June settlements, indicating a synchronized revaluation of market expectations. The uniform nature of the gains across the forward curves suggests that traders were responding to a change in overall sentiment regarding the cocoa balance sheet rather than reacting to a specific nearby supply concern.

New York Cocoa (CC)

In New York, the advance was particularly impressive given that the market had already rallied strongly on 15 June. The July 2026 contract gained a further 225 points, while deferred contracts rose between 234 and 247 points. Percentage gains averaged approximately 5.8% across the curve, with March 2027 leading the move. The fact that deferred maturities slightly outperformed nearby contracts indicates that participants were increasing exposure to the broader medium-term cocoa outlook rather than focusing exclusively on immediate supply conditions. Such price action is generally associated with renewed confidence in the structural tightness of the market despite recent improvements in West African arrivals.

London Cocoa (C)

London cocoa futures delivered an even stronger performance. Contracts gained between 193 and 209 points compared with 15 June settlements, producing average percentage gains of roughly 6.7%. The stronger relative performance of London compared with New York suggests that buying interest was particularly concentrated in the European market. This may reflect stronger commercial demand, positioning adjustments by European participants, or renewed attention to the tightening relationship between available certified stocks and forward demand requirements.

The shape of both forward curves remained remarkably stable during the rally. Price gains were distributed evenly from July 2026 through May 2027, indicating that traders were reassessing the entire supply-demand outlook rather than responding to a delivery-month-specific issue. When rallies occur in a parallel fashion across the curve, it typically signals a market-wide adjustment in expectations regarding future availability, inventories, or demand resilience. This contrasts with nearby-led rallies, which are usually driven by immediate logistical or delivery concerns.

EFP, EFS and Spread Activity

EFP, EFS and spread activity remained robust on 16 June, reinforcing the view that the rally was supported by commercial and institutional participation rather than speculative buying alone.

New York Cocoa (CC)

In New York, EFP volume totaled 211 lots and EFS volume reached 1,294 lots, with activity concentrated in the nearby July and September contracts. The continued use of these mechanisms during a strong upward move suggests active hedge management and physical market engagement rather than a withdrawal of commercial sellers.

London Cocoa (C)

London recorded significantly higher EFP activity at 2,138 lots, led by December and September contracts. This points to substantial commercial repositioning further along the curve and highlights strong participation from physical market participants and swap counterparties.

Spread trading was particularly heavy. New York registered 36,474 spread lots, equal to roughly 61% of outright futures volume, while London recorded 22,807 spread lots, approximately 57% of outright volume. Such elevated spread activity indicates that traders were actively adjusting curve positions and managing relative value exposure across delivery months.

The combination of strong outright volume, substantial EFP/EFS transactions and exceptionally high spread trading suggests that the rally was accompanied by broad market repositioning. Participation extended beyond speculative accounts and included commercial hedgers and institutional traders, lending greater credibility to the strength of the advance.

US–UK July Spread

$4,136 − (£3,151 x 1.342$/£) =$-92ton (down from $-56ton)

Volume and Open Interest

Trading activity remained elevated on 16 June despite the substantial rally already recorded on the previous session. In New York, total volume reached 59,478 contracts, slightly below the 62,861 contracts traded on 15 June but still well above the late-May average. London volume increased sharply to 39,709 contracts from 29,352 contracts on 15 June, representing the highest daily turnover since 5 June. The rise in London participation alongside strong price gains suggests that buyers became increasingly active as the market moved higher rather than waiting for a pullback.

New York Cocoa (CC)

New York trading activity remained elevated throughout the period, averaging nearly 59,500 contracts per session. While open interest declined from 202,759 on 11 June to 196,177 on 15 June, prices recovered sharply, suggesting that short covering contributed to the initial rebound. Volume remained strong on 16 June despite the rally, indicating continued market engagement.

London Cocoa (C)

London volume accelerated significantly on 16 June, reaching its highest level in more than a week. Open interest increased steadily from 230,082 contracts on 10 June to 232,714 contracts on 15 June, indicating that participants were adding exposure before the rally. The combination of rising open interest and sharply higher volume suggests stronger underlying conviction in London compared with New York.

New York continues to trade higher absolute volumes, but London has shown a more constructive open-interest trend. The next open-interest release will be critical in determining whether the 16 June advance attracted new longs or was driven primarily by the exit of existing short positions.

Exchange Trading Volume

These figures refer only to ICE Deliverable Stocks (Exchange-Visible)

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Cocoa Market Outlook for Wednesday (Sep Contract)

Wednesday's session is likely to open with the market attempting to extend the strong recovery seen over the previous two trading days. Technical indicators have improved noticeably, with momentum, volume and on-balance volume all turning more supportive after the recent correction. However, after gaining nearly 500 points from last week's lows, cocoa may encounter resistance as traders evaluate whether fresh buying interest is entering the market or whether the rally has been driven primarily by short covering. A period of consolidation above the 4,180-4,200 area would be constructive and could provide the foundation for another test of the 4,300-4,350 resistance zone. Overall, the short-term bias remains cautiously positive, but confirmation from open interest data and sustained buying activity will be important in determining whether the recovery can develop into a broader upward trend.

If you notice any discrepancies in these figures or have extra information, please email [email protected] or leave a comment – corrections and additional insights are always welcome.