Daily Cocoa Market Report (17 Dec 2025): Consolidation day

• Wednesday’s session was a purely technical trade.
• The European Parliament has voted to adopt targeted changes to delay and simplify the EU Deforestation Regulation (EUDR)

Cocoa attempted to stabilize following the prior sell-off, but upside momentum remained constrained by layered moving-average resistance. Price action showed short-covering and tactical dip-buying, not fresh directional conviction.

The European Parliament has voted to adopt targeted changes to delay and simplify the EU Deforestation Regulation (EUDR) after earlier informal agreement with EU member states. In the plenary vote, 405 MEPs supported the package, 242 opposed it, and eight abstained, endorsing provisions agreed on 4 December 2025 that both postpone enforcement by one year and ease compliance requirements. Under the revised timeline, large operators and traders must now apply the regulation from 30 December 2026, while small and micro-enterprises have until 30 June 2027 to comply. The updated rules also include simplified due diligence obligations and the removal of certain low-risk products from the law’s scope. Final adoption still requires formal endorsement by the Council and publication in the EU Official Journal before the changes become legally binding.

Based on developments reported over the past days, today’s cocoa market can be summarized as follows: cocoa prices remain supported primarily by technical and financial flows rather than immediate physical tightness, with the dominant driver being anticipatory positioning ahead of cocoa’s inclusion in the Bloomberg Commodity Index (BCOM). The recent rally has confirmed that passive and discretionary fund activity has begun to influence price formation, even as West African port arrivals remain seasonally strong and broadly in line with last year. This divergence highlights that current price strength is not demand-led, but instead reflects portfolio rebalancing and front-running of expected mandatory purchases by index-tracking funds, which are projected to inject a materially large volume of futures demand relative to cocoa’s modest open interest.

At the same time, the market remains structurally fragile. Financing stress across the West African supply chain: including exporter losses, government intervention in Ivory Coast, and prolonged payment delays to farmers in Ghana, continues to elevate volatility risk and reinforces a bullish risk premium, even in the absence of immediate supply disruption. While ICCO’s reduced surplus estimate and persistent climate uncertainty underpin medium-term upside risk, bearish counterweights are emerging, notably expectations of increased availability in the 2025/26 season and early indications of softer industrial demand. In aggregate, today’s market reflects a technically driven holding pattern, with prices supported by index-related flows in the short term, while the sustainability of the move remains contingent on post-rebalancing fundamentals, particularly West African supply execution and downstream demand resilience.

Weather Conditions

Seasonal weather conditions across Côte d’Ivoire and Ghana remain broadly consistent with typical mid-December patterns. Harmattan influence is present but moderate, with dry northeasterly winds reducing humidity without creating acute crop stress. Temperatures are stable, and there have been no reports of extreme dryness or disruptive rainfall. Overall, weather continues to act as a background constraint rather than an active market driver, supporting price stability but not generating a fresh risk premium.

Futures Performance

New York Cocoa (ICE US)

New York cocoa recorded a decline across the front curve. Losses were evenly distributed, consistent with continued technical pressure rather than isolated contract-specific selling, and point to residual de-risking following the prior liquidation phase.

London Cocoa (ICE Europe)

London cocoa finished broadly flat on a net basis, with marginal mixed changes across the curve. The absence of directional follow-through reinforces the view of a technically driven consolidation, with spreads and structure remaining stable despite soft New York sentiment.

Contango vs Backwardation

The cocoa forward curve remains broadly flat to mildly contangoed, with deferred contracts trading at small premiums to nearby months. This structure reflects the absence of immediate deliverable tightness and suggests that current price discovery is being driven more by technical positioning and risk management than by near-term physical stress. The lack of sustained backwardation indicates that nearby supply concerns are not yet forcing aggressive front-month demand, while the shallow contango points to market participants maintaining exposure further out the curve in anticipation of medium-term supply risks rather than reacting to short-term shortages.

US–UK Spread (March 2026)

$5,958−(4,357£×1.337$/£)=$132 (down from $206)

Using March 2026 closes, the US–UK spread continued to compress, leaving a US premium of approximately $132, down from $152 the previous session.

This $20 narrowing reflects continued relative strength in London versus New York. UK prices remain better supported by physical considerations, while US futures have lagged, allowing the transatlantic dislocation to ease further after last week’s extreme divergence.

Volume & Open Interest

New York Cocoa (ICE US)

London Cocoa (ICE Europe)

Trading activity on Wednesday, 17 December, reflected a cooling but orderly market following the sharp liquidation earlier in the week. Both New York and London volumes declined further from Monday–Tuesday levels, confirming that the bulk of forced position adjustment has already occurred. Importantly, the absence of volume expansion during Wednesday’s price stabilization argues against renewed directional conviction from either side.

Open interest trends into mid-week remain decisively lower versus early-December highs, reinforcing that the recent correction has been driven primarily by long liquidation rather than aggressive short selling. This distinction matters: liquidation-led declines tend to exhaust faster and often transition into range-bound consolidation, rather than accelerating trend continuation.

Price action is consistent with this structure. Futures stabilized above recent intraday lows despite lighter turnover, suggesting selling pressure is diminishing, not intensifying. The lack of fresh open interest creation alongside modest price recovery points to position repair and selective re-risking, rather than speculative chasing.

The combined signal from lower volume, declining open interest, and stabilizing prices supports a post-liquidation consolidation phase, with the market awaiting a new catalyst before committing to a sustained directional move.

Certified Stocks

• US certified stocks: 1,643,161 bags (down from 1,651,199)
• UK certified stocks: 566,563 bags (up from 561,562)

Stock levels remain historically tight, but stocks did not influence intraday price discovery on Wednesday. The market ignored inventory signals entirely.

Intraday / Short-Term Outlook

US cocoa remains in a corrective, bearish regime across all observed timeframes. On the weekly chart, price has decisively rolled over from the 2023–early 2024 parabolic advance and is now trading below the 90- and 150-week moving averages, with the 200-week average around 5,550–5,600 acting as the last meaningful structural support. Momentum indicators confirm weakness, with RSI near 40, a deeply negative MACD, and subdued OBV, indicating that recent rebounds lack genuine accumulation and resemble bear-market rallies. On the 4-hour chart, the market continues to print lower highs and lower lows, with the latest rebound failing precisely at the declining 200-period moving average, reinforcing the bearish structure. Price is consolidating around the 5,950–6,000 pivot, but momentum remains soft and distributional, suggesting this is a bear flag rather than a base. The 1-hour and 5-minute charts show compression and declining volatility, repeated rejections above short-term moving averages, and weak RSI readings, all consistent with a sell-the-rallies environment. Unless cocoa can reclaim and hold above the 6,150–6,250 resistance zone with clear volume expansion and a momentum regime shift, the higher-probability path remains a downside resolution toward 5,900, then 5,750–5,600, as the market continues to digest the unwinding of the prior speculative bubble.

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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