Daily Cocoa Market Report (26 March 2026): Cocoa Rebound Lacks Conviction as Rain Forecasts Add Downside Risk

The absence of fundamental drivers confirms that the 26 March rebound was purely technical and positioning-driven, rather than a reaction to new information.

The prior session (25 March) reflected aggressive selling with rising open interest, pointing to new short positioning. The subsequent recovery on 26 March, in the absence of news, is therefore best characterized as short-covering and profit-taking, not fresh directional buying.

Importantly, near-term fundamentals may begin to lean bearish. Weather forecasts indicate beneficial rainfall expected over the weekend in Ivory Coast and Ghana, which could support crop development and alleviate some supply concerns. While a single weather event is not decisive, it contributes to a less supportive fundamental backdrop, particularly when the market is already technically weak.

Futures Performance

NY Cocoa Futures (CC)

NY cocoa futures staged a measured recovery on 26 March, retracing part of the sharp decline observed in the previous session. The rebound was evident across the curve, with front contracts posting gains in the range of +0.66% to +0.86%, while the deferred Mar-27 contract outperformed slightly at +1.06%. This marginal back-end strength suggests that the recovery was not driven by immediate tightening in nearby supply-demand conditions, but rather by a broader repositioning or short-covering flow extending along the curve.

The relatively even distribution of gains indicates a parallel upward shift rather than a meaningful structural change. Unlike the prior session, where losses were clearly front-loaded, the recovery did not exhibit strong front-end leadership. This implies that near-term demand signals remain subdued, and the market has not re-established a bullish nearby narrative. Instead, the price action is consistent with technical stabilization following liquidation pressure.

London Cocoa Futures (C)

London cocoa futures mirrored the move in New York, also posting a broad-based recovery across maturities. Percentage gains were slightly more pronounced in the mid-curve, particularly in Jul-26 (+1.06%), while the rest of the curve advanced within a narrow +0.73% to +0.86% range. This pattern reinforces the view of a generalized short-covering phase rather than targeted buying interest in specific maturities.

Importantly, the absence of strong front-end outperformance in both markets suggests that the bearish structure established previously remains largely intact. The recovery has not materially altered curve dynamics, with no clear evidence of tightening nearby spreads or aggressive re-entry of commercial buying. Overall, the session reflects a corrective bounce within a still-fragile market context, where sentiment remains cautious and reactive rather than decisively constructive.

EFP, EFS and Spread Activity

EFP and EFS activity remained limited across both cocoa markets, reinforcing the view that the session’s recovery was primarily driven by futures-side positioning rather than physical market engagement.

In New York, EFP volumes were modest, with activity concentrated in the Jul-26 contract (161 lots), while May-26 saw only 4 lots and the rest of the curve remained inactive. EFS flow was negligible, with just 3 lots recorded in May-26 and no activity further along the curve. This muted EFP/EFS participation suggests that the rebound was not underpinned by significant physical hedging or origin-related selling, but rather by financial flows such as short covering.

London cocoa showed a slightly different profile, with EFP activity more visible in Sep-26 (517 lots), alongside smaller flows in May-26 (13 lots). EFS volumes were more evenly distributed, with 309 lots in May-26 and 218 lots in Jul-26, indicating some degree of physical market interaction in the nearby structure. However, despite this, overall activity remained moderate and did not point to aggressive commercial engagement.

Spread activity was more pronounced and provides additional insight into the nature of the move. In New York, spread volume was heavily concentrated in the front of the curve, with May-26 (3,329 lots) and Jul-26 (5,627 lots) leading, followed by Sep-26 (3,587 lots). Activity tapered significantly further out. This front-loaded spread flow aligns with short-covering and position rolling, particularly after the prior session’s liquidation.

London spreads also showed strong participation, though with a more balanced distribution. Dec-26 (3,822 lots), Sep-26 (2,844 lots), and Jul-26 (2,644 lots) all recorded substantial volume, alongside solid activity in May-26 (1,501 lots). This suggests a combination of rolling and relative value positioning across the curve rather than purely front-end driven adjustments.

US–UK May Spread

$3,162 − (2353 x 1.333$/£) =$25ton (up from $17)

Volume and Open Interest

NY Cocoa Futures (CC)

In New York, the past five sessions show a clear divergence between volume and open interest. While traded volume has been trending lower into 26 March, open interest continued to build steadily through 25 March, reaching 198,041. This pattern is indicative of position accumulation during the sell-off phase, rather than liquidation. The increase in open interest alongside declining prices earlier in the week suggests fresh short positioning entering the market. The subsequent drop in volume on 26 March, combined with the price rebound, is consistent with reduced participation and short-covering rather than aggressive new buying.

London Cocoa Futures (C)

London presents a similar but slightly more constructive structure. Volume declined into early week lows before recovering on 25 March (25,276 lots), followed by a modest pullback on 26 March. Open interest, however, increased consistently and more aggressively than in New York, rising from 204,115 to 210,883 over four sessions. This steady build in OI alongside mixed volume suggests sustained engagement from market participants, likely reflecting both hedge-related flows and speculative positioning.

Across both markets, the key signal is the expansion in open interest during the decline phase, followed by a reduction in volume during the rebound. This combination typically characterizes a market where the initial move was driven by new positioning (predominantly shorts), and the subsequent recovery lacks strong conviction, being driven more by position adjustment than fresh directional inflows. The absence of updated open interest data for 26 March limits confirmation, but the intraday structure points toward a technically driven bounce within an still fragile positioning framework.

Exchange Trading Volume

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:

Data

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What to expect Tomorrow

The most probable scenario is range to slightly lower, with the market likely to test resistance early and struggle to sustain upside. Unless price breaks and holds above 3220 with volume expansion, rallies should be viewed as corrective within a broader downtrend.

A rejection from the 3180–3220 zone would likely lead to a retest of 3100, with downside extension toward 3050 if selling pressure re-emerges. Conversely, a clean break above 3220 would shift the intraday bias toward a deeper corrective move, potentially targeting 3300, though this currently has lower probability given the prevailing trend structure.

The setup favors sell-on-strength rather than trend reversal, with short-covering largely exhausted and no clear evidence yet of sustained buying interest.

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.