Daily Cocoa Market Report (12 Dec 2025): Consolidation deepens as curve structure sends mixed signals ahead of December expiry

• Cocoa futures consolidated on Friday, with New York and London both ending mixed after the week’s sharp rally stalled below key resistance levels.
• Volumes cooled from midweek highs but remained elevated, indicating continued participation rather than capitulation.
• Attention is shifting toward December contract expiry, delivery flows, and whether certified stock drawdowns continue into year-end.

Cocoa futures ended the week in consolidation mode after aggressively repricing West African supply risk earlier in the week. Both New York and London paused following two sessions of sharp gains, as traders reassessed whether macro tailwinds, policy pressure, and sustainability constraints are sufficient to justify another leg higher in the near term. While upside momentum slowed, the broader structure remains constructive, supported by declining certified stocks, sustained participation, and persistent uncertainty around supply conditions in Côte d’Ivoire and Ghana.

Supply & Origin Developments

Physical market sentiment remains cautious rather than relieved. Market participants continue to question the durability of Ivorian arrivals following last week’s drop below the 100,000-ton threshold, with anecdotal reports suggesting uneven mid-crop quality and lingering labour shortages across key producing regions. Weak farm maintenance and aging trees remain structural headwinds, limiting the potential for a rapid recovery in output even if weather conditions stabilize.

Policy pressure on West African producers continues to build. The European Union has reiterated warnings to Ghana and Côte d’Ivoire that failure to reform governance, traceability, and sustainability frameworks risks eroding global market share. While no immediate export restrictions are in place, the messaging reinforces longer-term uncertainty around compliant supply into Europe and adds friction to forward selling by origin players.

ESG risk remains an increasingly important component of the cocoa narrative. Recent analysis highlighting potential forest loss linked to major multinational cocoa supply chains has intensified scrutiny of sourcing practices ahead of stricter enforcement of EU deforestation rules. This environment is encouraging more conservative buying behavior for forward delivery and may constrain effective supply availability, even where physical production exists.

On the demand side, reformulation trends continue to surface as a downstream response to high cocoa prices. Recent developments in the UK, where certain confectionery products have lost their legal classification as “chocolate,” underscore the tension between raw-material inflation and consumer affordability. While not immediately bearish for cocoa demand, these trends signal longer-term adjustments within the value chain.

Weather Conditions

Weather across West Africa remains mixed. Isolated showers continue to provide limited soil-moisture support, but drying conditions remain uneven. With the region entering the most intense phase of the Harmattan, downside risk to bean size and quality persists. Any strengthening of dry winds would likely exacerbate pod stress and defect rates, keeping weather a net bullish factor in the absence of sustained rainfall.

Futures Performance

New York Cocoa (ICE US)

New York moved into a clear consolidation / pullback phase, with uniform declines across the actively traded deferred months and September holding flat. The symmetry of the declines (-27 to -29) points to profit-taking rather than liquidation, consistent with a market pausing after an aggressive multi-day rally rather than reversing trend.

London Cocoa (ICE Europe)

London diverged sharply from New York, posting strong gains across the entire deferred curve. The broad-based advance reinforces persistent backwardation and signals ongoing concern over European-deliverable supply, even as New York paused. This NY–London divergence is typical when physical and compliance risk dominates price discovery.

Contango vs Backwardation

New York continues to display a fragmented curve, with mild contango from March into early summer contracts, followed by backwardation further out the curve. This structure reflects a market that remains undecided—acknowledging near-term tightness while still debating the durability of supply stress into late 2026. In contrast, London remains in clear backwardation across all deferred contracts, signaling greater concern over nearby availability and compliance-constrained supply into Europe.

US–UK Spread

$6,297−(4,565£×1.337$/£)=$211

The US–UK March spread compressed sharply on Friday, driven by London’s strong outperformance while New York consolidated. The move reflects renewed focus on European deliverable supply constraints and compliance risk, forcing London prices higher relative to New York. The narrowing spread signals that recent price leadership is shifting away from speculative momentum in the US toward physical and regulatory stress embedded in the European market.

Volume and Open Interest

New York Cocoa (ICE US)

London Cocoa (ICE Europe)

Volumes moderated on Friday but remained above recent averages, confirming continued engagement despite price consolidation. Earlier sessions show a clear build in open interest in New York into midweek, indicating that the sharp advance earlier in the week was supported by new long positioning rather than short covering alone. In London, open interest has edged lower from recent highs, suggesting some position trimming after aggressive backwardation-driven gains, though participation levels remain consistent with a structurally tight market.

COT

New York Cocoa (ICE US)

The US cocoa COT data (still lagging the most recent price action) shows a clear and sustained build-up of speculative length over time, culminating in the most recent readings where Managed Money long positions have expanded aggressively while shorts remain comparatively contained. In the latest observation, non-commercial longs stand at 47,253 contracts, while shorts are 13,707, leaving funds deeply net long. This represents a structurally bullish positioning profile and confirms that recent price strength has been driven primarily by new long participation rather than short covering.

Open interest has risen sharply alongside this increase in speculative length, reaching 178,592 contracts, reinforcing the conclusion that capital is entering the market rather than rotating within it. This is a critical distinction: rising prices accompanied by rising open interest and expanding non-commercial longs indicate trend-following conviction, not exhaustion.

On the commercial side, producers and merchants remain structurally net short, with short positions (107,951 contracts) continuing to exceed longs (67,964). This reflects ongoing hedging into higher prices rather than a signal of improving physical supply conditions. Importantly, commercial shorts have increased in parallel with speculative longs, suggesting that producers are using the rally to lock in prices rather than stepping away from the market.

Non-reportable (retail and small trader) positioning remains relatively stable and balanced, indicating that the move is being driven by institutional participants rather than late-stage retail speculation.

London Cocoa (ICE Europe)

The latest UK cocoa COT data shows clear evidence of managed-money short covering rather than renewed bearish positioning. Managed Money increased long exposure modestly while reducing shorts by over 1,000 contracts, narrowing the net short position by approximately 1,500 contracts week-on-week. This confirms that recent London price resilience has been driven by defensive positioning and short covering, not by aggressive new speculative longs.

Producer and merchant hedging increased on the short side, consistent with selling into higher prices rather than signaling supply relief. Open interest declined slightly, reinforcing the view that last week’s move reflected position adjustment rather than fresh participation. Overall, London remains structurally net short, leaving the market vulnerable to further short covering if New York strength persists or West African supply risks intensify.

Certified Stocks

• US certified stocks: 1,659,110 tons (down from 1,659,791)
• UK certified stocks: 773,281 tons (up from 760,234)

The continued drawdown in US stocks reinforces tight deliverable supply, while the increase in UK stocks provides limited offset and does not materially change the global balance.

Short-Term Outlook

US Cocoa Futures are currently in a counter-trend rebound within a broader corrective structure following the 2024 blow-off, not in a confirmed new bull market. The weekly chart remains bearish-to-neutral with price well below declining long-term moving averages, though downside momentum has largely exhausted and mean-reversion forces are active. On the daily chart, trend has shifted to neutral-bullish with price above short-term averages and momentum strong but stretched, as RSI is elevated and stochastic is overbought near key resistance. The rally shows improving volume but lacks full accumulation confirmation, suggesting fragility. On the 60-minute chart, bullish structure is weakening as momentum rolls over near the 6,300–6,400 resistance zone, increasing the risk of consolidation or a pullback toward 6,100–6,200. Intraday action is range-bound and directionless, offering little edge without a breakout. Overall, the highest-probability scenario is sideways trade to a shallow retracement before the market reassesses, with upside extension requiring a sustained break above resistance and downside risk increasing materially below the 5,950 support level.

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.

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