• Cocoa futures extend their rally, with NY March closing above $6,200 and London approaching £4,500.
• Supply concerns deepen as early-season arrivals fail to reassure traders.
• Labour shortages, deteriorating crop expectations, and the approaching Harmattan elevate Q1–Q2 risk.
• Pending inclusion in the Bloomberg Commodity Index may add 35,000–40,000 contracts of inflows.
• The Federal Reserve cut interest rates by 25 basis points

Cocoa futures extended Tuesday’s rally, with New York’s March contract closing above the $6,200 threshold and London approaching £4,500. Stronger New York volume, firmer certified stocks in Europe, and deepening concerns over West African supply continued to drive aggressive repricing across the front months.

The market’s message is increasingly clear: early-season arrivals no longer reassure traders, and the risk of a weaker main-crop tail is prompting pre-emptive buying on both exchanges. Expectations of a deteriorating West African crop, ongoing labour shortages, and the approaching Harmattan are amplifying supply risks for the first and second quarters. The pending inclusion of cocoa in the Bloomberg Commodity Index (BCOM) is adding further upward pressure, with industry estimates pointing to 35,000 to 40,000 contracts of potential index-related inflows in early January.

Reports also highlight rising concern over the mid-crop, which could suffer if dry-season conditions intensify. This comes as arrivals increasingly disappoint. The recent decline in Côte d’Ivoire’s weekly inflows, which fell below 100,000 tons in the Dec 1 to Dec 7 period, has traders questioning whether the weakness is temporary. Exporters remain liquidity-constrained, labour availability is limited, and farm maintenance is falling short of normal seasonal standards, reinforcing the market’s tightening supply narrative.

Macro Context: US Interest Rate Decision

The Federal Reserve cut interest rates by 25 basis points on December 10, lowering the federal funds target range to 3.50%–3.75% in what marked the third consecutive reduction this year, though the move generated several dissenting votes within the FOMC. Policymakers signaled they are likely to pause after this cut, projecting only one additional reduction in 2026 as they balance slowing labour-market data against inflation that remains slightly above target. Markets interpreted the decision as modestly dovish, triggering a decline in the U.S. dollar and a broad rally in equities. For cocoa, the implications are constructive: a weaker dollar improves purchasing power for non-U.S. buyers and tends to lift USD-denominated commodity prices, while reduced financing costs lower the burden of maintaining long futures positions. The rate cut also improves overall risk appetite, encouraging funds to rotate capital into commodities with strong bullish narratives.

Weather Conditions

Scattered and isolated showers were reported across Ivory Coast, southern Ghana, and southwestern Cameroon, offering limited soil moisture support for pod development but also creating uneven drying conditions and occasional delays in harvesting and transportation. However, these rains remain patchy and insufficient to offset the broader shift toward drier conditions as the region enters the most intense phase of the Harmattan. Weather risk therefore remains high, with any further strengthening likely to reduce bean size, increase pod shriveling, and raise defective-bean incidence. Overall, despite intermittent showers, weather continues to be a net bullish factor for the cocoa market until strong and sustained rains return, an outcome not expected in the near term.

Futures Performance

New York Cocoa (ICE US)

New York extended Tuesday’s rally, with all four contracts gaining +339 to +414 USD on the day. The corrected March close at 6,223 shows a substantial +346 USD increase, reflecting aggressive short covering and tightening near-term supply dynamics. This signals that the market is increasingly pricing a meaningful risk to Q1–Q2 availability.

London Cocoa (ICE Europe)

London rallied strongly again, with gains of +209 to +294 GBP. December continues to lead, reflecting tightness in nearby physical availability. Though volume remains thinner than New York, the price action confirms that both exchanges are now pricing a synchronized tightening across the front months.

US–UK Spread

$6,223−(4,504£×1.338$/£)=$202

That is only slightly below yesterday’s 215 dollar differential.This stability shows both markets re-rated higher together, not through exchange-specific distortions.

Volume and Open Interest

New York Cocoa (ICE US)

London Cocoa (ICE Europe)

New York posted its highest daily volume since mid-November, with 43,617 contracts traded as prices broke above the $6,200 barrier. Rising volumes on rising prices confirm that new long positions are entering, not just short covering.

London volumes also surged to 30,203 contracts, the largest in nearly two weeks. Although OI for 10 Dec is pending, the pattern of recent days reflects stable commercial hedging and controlled speculative adjustment.

The combined picture shows broad participation in the rally, with conviction coming back into the market as traders re-price the fundamental risks ahead of the peak dry-season window.

Certified Stocks

• US certified stocks: 1,664,563 tons (down from 1,672,131)
• UK certified stocks: 750,000 tons (up from 732,188)

The continued drawdown in US stocks reinforces the tightness in deliverable supply. The rise in UK stocks adds some buffer to the European market but does not change the broader global narrative: inventories remain historically constrained.

Short-Term Outlook

Across all timeframes, cocoa futures show a coordinated bullish transition. The 5-minute chart reflects a strong intraday uptrend with only a minor pullback, while the 1-hour chart confirms a clear trend reversal supported by expanding volume and strong momentum. The daily chart shows a broader shift from a prolonged bearish phase into early-stage recovery, with price breaking above key moving averages and accelerating upward. The weekly chart reinforces this with evidence of a major cycle bottom, renewed accumulation, and price reclaiming long-term support levels. Collectively, the charts indicate that cocoa has moved out of its downtrend and is now in the early phase of a sustained bullish reversal, with resistance in the 6350–6800 zone and downside risk contained unless price falls back below 5800.

If you notice any discrepancies in these figures or have extra information, please email hello@cocoaintel.com or leave a comment – corrections and additional insights are always welcome.

Cocoa Calendar

Cocoa market analysis with zero sugar-coating.

CocoaIntelCocoa Intel