Cocoa Rallies on El Niño Fears Before Profit-Taking Halts Four-Day Surge (10 July 2026)
Cocoa futures retreated sharply on Friday, reversing part of the weekly rally as broad-based profit-taking and increased selling pressure weighed on both exchanges. New York September cocoa fell 393 points (-6.18%), while London September cocoa declined 306 points (-6.47%), with losses extending across the forward curve. The sell-off was accompanied by elevated trading activity in New York. Despite the sharp correction, prices remained above key medium-term support levels, suggesting the market has entered a consolidation phase rather than confirming a broader trend reversal.
Attention shifted toward the 2026/27 West African crop outlook after industry sources in Ivory Coast warned that next season's main crop could decline by more than 10%. Pod counters and exporters cited excessive rainfall, the spread of black pod disease, insufficient crop maintenance, and the growing threat of an El Niño weather pattern as the primary risks to production. Initial estimates from Oxford Economics suggest Ivory Coast's 2026/27 cocoa harvest could fall by approximately 20% if adverse weather persists and fertilizer application remains below optimal levels.
Despite these longer-term supply concerns, traders noted that the current rally had become increasingly driven by speculative positioning rather than immediate changes in physical fundamentals. Market participants highlighted that nearby cocoa availability remains relatively comfortable, supported by rising ICE certified stocks and expectations for additional arrivals at Ivorian ports through August.
The report also highlighted a contrasting outlook between the current and next crop cycles. Favorable weather earlier this year supported unusually high bean counts during the ongoing mid-crop, but producers warned that the heavy pod load may have exhausted cocoa trees, potentially reducing productive capacity for the upcoming main crop beginning in September. If El Niño strengthens during the second half of the year, weather conditions across West Africa could become increasingly unfavorable, posing a significant upside risk to the 2026/27 global cocoa supply balance.
7-Day Weather Outlook (West Africa)
Weather conditions over the next seven days are expected to remain predominantly wet across the main cocoa-producing regions of West Africa, with widespread rainfall forecast from Guinea through Côte d'Ivoire, Ghana, Togo, Benin, Nigeria and into Cameroon.
The heaviest rainfall is projected across Guinea, southern Côte d'Ivoire, southern Ghana, southern Nigeria and western Cameroon, where several areas are expected to receive 100-300 mm of accumulated precipitation. Moderate rainfall (25-100 mm) is forecast across most remaining cocoa-growing regions, maintaining high soil moisture levels.
The continued wet pattern is likely to support soil moisture reserves but also increase disease pressure, particularly from black pod disease, while limiting opportunities for drying and field maintenance. Excessive moisture may also hinder harvesting, transportation and post-harvest drying of beans in localized areas experiencing persistent rainfall.
The forecast remains favorable for maintaining moisture availability but unfavorable for crop health and field operations, reinforcing concerns that prolonged wet conditions could continue to affect the development of the upcoming 2026/27 main crop, particularly if rainfall persists beyond the next week.
Cocoa Intel
What to Watch This Week
Q2 2026 Cocoa Grindings (16 July)
The market's primary focus this week will be the release of the Q2 2026 cocoa grinding data from Europe, North America and Asia on Thursday, 16 July. The reports are scheduled for 07:00 UK / 08:00 CET (Europe), 09:00 ET (North America) and after 16:00 Singapore Time (Asia). Grindings are one of the most closely watched indicators of global chocolate demand, measuring the volume of cocoa beans processed into cocoa liquor, butter and powder.
The releases will provide the first comprehensive assessment of second-quarter demand following Barry Callebaut's stronger-than-expected sales volumes and recent signs of improving consumption despite historically elevated cocoa prices.
Weekly Summary
Cocoa futures recorded one of their strongest weekly advances of the year, driven by escalating weather concerns and aggressive speculative buying. New York September 2026 cocoa rallied from 4,988 on 3 July to 6,366 on 9 July before correcting to 5,973 on Friday, while London followed a similar pattern.
The primary catalyst was the increasing probability of a strong to potentially very strong El Niño. Weather forecasts and Reuters reports heightened concerns over the 2026/27 West African crop, with Ivory Coast's next main crop projected to decline by more than 10%, and some early estimates suggesting losses of up to 20% if excessive rainfall, black pod disease and tree stress persist.
Supporting the rally, Barry Callebaut reported 5.7% year-on-year growth in third-quarter sales volumes, its first quarterly increase in more than two years, while stronger grinding data from Ivory Coast and the Netherlands pointed to improving chocolate demand despite elevated cocoa prices.
Counterbalancing these bullish developments, near-term supply remained comfortable. Ivory Coast cocoa arrivals reached 1.934 million tonnes by 5 July, 18.8% above last season, with weekly arrivals totaling 24,000 tonnes versus 18,000 tonnes a year earlier. Together with rising ICE certified stocks and the market's contango structure, these figures indicate adequate nearby bean availability.
Futures Performance
The cocoa market experienced a sharp reversal on Friday, erasing a significant portion of Thursday's powerful rally. After four consecutive sessions of strong gains, both the New York and London markets came under broad-based selling pressure, with losses extending across the forward curve. The uniform declines across deferred contracts indicate that the move was driven by widespread profit-taking rather than weakness confined to nearby maturities.
New York Cocoa (CC)
| Contract | 09-Jul Close | 10-Jul Close | Change | % Change |
|---|---|---|---|---|
| Sep-26 | 6,366 | 5,973 | -393 | -6.18% |
| Dec-26 | 6,487 | 6,100 | -387 | -5.97% |
| Mar-27 | 6,566 | 6,181 | -385 | -5.86% |
| May-27 | 6,540 | 6,172 | -368 | -5.63% |
The New York market surrendered a substantial part of Thursday's advance, with every actively traded deferred contract falling by approximately 370–390 points. September 2026 declined 393 points (-6.18%) to close at 5,973, while December 2026 lost 387 points (-5.97%) to settle at 6,100. March 2027 dropped 385 points (-5.86%) to 6,181, and May 2027 finished 368 points lower (-5.63%) at 6,172.
Despite the sharp correction, the nearly identical losses across the curve suggest an orderly repricing rather than a front-month squeeze. The broad nature of the decline indicates that market participants reduced long exposure across maturities following Thursday's exceptional rally.
London Cocoa (C)
| Contract | 09-Jul Close | 10-Jul Close | Change | % Change |
|---|---|---|---|---|
| Sep-26 | 4,732 | 4,426 | -306 | -6.47% |
| Dec-26 | 4,790 | 4,490 | -300 | -6.26% |
| Mar-27 | 4,853 | 4,558 | -295 | -6.08% |
| May-27 | 4,847 | 4,545 | -302 | -6.23% |
London cocoa futures mirrored the weakness seen in New York, with all major deferred contracts retreating by roughly 300 points. September 2026 fell 306 points (-6.47%) to 4,426, December 2026 declined 300 points (-6.26%) to 4,490, March 2027 eased 295 points (-6.08%) to 4,558, and May 2027 lost 302 points (-6.23%) to close at 4,545.
The synchronized declines between London and New York reinforce that Friday's session was characterized by global liquidation after Thursday's aggressive advance. Although prices corrected sharply, the market remained well above levels seen earlier in the week, suggesting that the broader trend will depend on whether buyers re-enter following this round of profit-taking.
EFP, EFS and Spread Activity
| Market | Futures Volume | EFP | EFS | Spread Volume | Spread % of Futures |
|---|---|---|---|---|---|
| New York (CC) | 59,613 | 282 | 2,002 | 34,415 | 57.7% |
| London (C) | 42,444 | 1,407 | 800 | 24,690 | 58.2% |
Exchange for Physical (EFP) activity remained modest in New York, with 282 contracts executed, broadly unchanged from recent sessions. Exchange for Swaps (EFS) reached 2,002 contracts, driven almost entirely by activity in the May 2027 contract, indicating that some market participants continued to adjust OTC positions despite the sharp decline in futures prices.
Spread trading remained exceptionally active. New York recorded 34,415 spread contracts, representing approximately 58% of total futures volume (59,613 contracts). The heaviest spread activity was concentrated in the September/December and December/March maturities, suggesting that traders were actively rolling positions and managing curve exposure during Friday's broad-based sell-off.
London displayed a similar pattern. EFP volume increased to 1,407 contracts, while EFS activity totaled 800 contracts, primarily in the December 2026 and July 2027 contracts. Total spread volume reached 24,690 contracts, accounting for approximately 58% of total futures volume (42,444 contracts), highlighting continued emphasis on calendar spread trading rather than outright directional positioning.
US–UK July Spread
(Sep Contract)
$5,973 − (£4,426 x 1.340$/£) =$42ton (up from $20ton)
Volume and Open Interest
New York Cocoa (CC)
| Date | Volume | Open Interest |
|---|---|---|
| 06-Jul | 63,024 | 195,783 |
| 07-Jul | 59,983 | 197,971 |
| 08-Jul | 54,825 | 197,946 |
| 09-Jul | 55,509 | 201,342 |
| 10-Jul | 59,613 | n.a. |
Trading activity diverged between the two cocoa exchanges on Friday. New York futures volume increased by 7.4% to 59,613 contracts, the highest daily turnover since 6 July, indicating heightened participation during the broad-based sell-off. The increase in volume alongside falling prices suggests extensive profit-taking and active repositioning following Thursday's strong rally.
London Cocoa (C)
| Date | Volume | Open Interest |
|---|---|---|
| 06-Jul | 45,574 | 234,911 |
| 07-Jul | 43,364 | 234,948 |
| 08-Jul | 43,919 | 235,463 |
| 09-Jul | 44,252 | 236,125 |
| 10-Jul | 42,444 | n.a. |
In contrast, London futures volume declined by 4.1% to 42,444 contracts from 44,252 contracts on Thursday. Despite the lower turnover, the market still experienced a significant decline across the forward curve, implying that selling pressure was widespread but less volume-intensive than in New York.
COT Analysis
The latest Commitments of Traders (COT) report shows that speculative funds remained net short 20,051 contracts as of 7 July, while commercial participants maintained a net long position of 18,607 contracts. During the reporting week, non-commercial traders reduced 2,341 short contracts while trimming only 513 long positions, indicating the early stages of short covering before the market's explosive rally. Commercial traders increased both long and short exposure, reflecting active hedging activity rather than a significant directional shift.
Total open interest increased by 24,186 contracts to 267,273, confirming that new capital continued to enter the cocoa market ahead of the week's major price advance. Rising open interest alongside increasing participation suggested that investors were becoming more actively engaged as weather risks surrounding the 2026/27 crop intensified.
Cocoa Intel
Exchange Trading Volume
| Exchange | 09 Jul 2026 | 10 Jul 2026 | Change | % Change |
|---|---|---|---|---|
| ICE U.S. Cocoa | 3,135,943 | 3,151,790 | +15,847 | +0.51% |
| ICE Europe Cocoa | 1,061,719 | 1,096,563 | +34,844 | +3.28% |
The continued increase in certified stocks indicates that additional cocoa is entering exchange-approved warehouses and becoming available for delivery against futures contracts. Rising certified inventories generally signal improving deliverable supply and reduce the risk of physical shortages within the exchange delivery system.
The current market structure remains in contango, where deferred contracts trade at a premium to nearby maturities. Rising certified stocks are consistent with this structure, as expanding exchange inventories reduce the urgency for immediate physical supply and encourage inventory financing and storage. Rather than creating pressure for nearby deliveries, the market continues to compensate holders for carrying cocoa forward through time.
The more substantial increase in European certified stocks is particularly noteworthy, suggesting that warehouse inflows remain robust. If this trend persists, it would reinforce the current contango structure by supporting comfortable nearby supply conditions and limiting the likelihood of a return to a supply-driven squeeze.
These figures refer only to ICE Deliverable Stocks (Exchange-Visible)
Readers can explore detailed cocoa market datasets, futures statistics, and historical indicators in the CocoaIntel Data Hub:
Cocoa IntelWhat to expect on Monday
Monday's session is expected to open on a cautious footing following Friday's broad-based sell-off. The market is likely to enter a period of consolidation as participants assess whether the recent correction has attracted sufficient buying interest.
A hold above the 6,000 level would favor a recovery toward 6,150–6,250, with buyers likely to re-emerge on price weakness. Conversely, a decisive break below 6,000 could trigger additional selling toward 5,850–5,900, extending Friday's corrective move.
The near-term bias is neutral to slightly bearish, with consolidation around the 6,000 area the most probable outcome before the market establishes its next directional move.
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.
