Daily Cocoa Market Report (26 Jan 2026): Cocoa Stabilises After Liquidation, But Demand Concerns Dominate

Cocoa prices staged a partial technical rebound on Monday, with the front-month US contract (Mar-26) settling at 4,324, up +113 points (+2.7%) from Friday’s close, while London Mar-26 ended at 3,067, gaining +65 points (+2.2%). Despite this recovery, price action remains corrective in nature following last week’s heavy sell-off, with both markets still well below recent highs and the broader daily and weekly structures pointing to underlying weakness. Momentum on intraday charts faded into the close, suggesting the bounce lacked strong conviction and remains vulnerable to renewed downside pressure.

Market commentary continues to highlight a growing divergence between price action and physical fundamentals. StoneX noted that cocoa is technically oversold, but warned that any rebound is likely to be short-lived due to ongoing selling pressure from producing countries. With the main harvest underway and weather conditions broadly supportive, producer selling is expected to remain elevated, capping upside in the near term.

Multiple sources, including Saxo Bank, argue that the recent collapse in cocoa prices increasingly reflects demand destruction rather than supply relief. High prices over the past year have materially reduced consumption, with grinders scaling back and buyers delaying purchases. This view was reinforced by corporate data from Barry Callebaut, the world’s largest chocolate maker, which reported a 22% year-on-year drop in first-quarter cocoa trading volumes, underlining the severity of end-user retrenchment.

On the supply side, Ivory Coast port arrivals reached 1.200 million tonnes as of January 25, down 3.5% year-on-year, according to exporter estimates cited by Reuters. Weekly arrivals totalled 38,800 tonnes, slightly below the same period last season. While this confirms that supply remains constrained, the shortfall is no longer deep enough to offset weakening demand dynamics.

Weather developments in West Africa remain broadly supportive for the upcoming mid-crop. Farmers in Ivory Coast reported that below-average but well-timed rainfall in key growing regions is helping pod development ahead of the April–September harvest. Conditions in Daloa, Soubré, Agboville and parts of the centre-west point to a potentially better mid-crop than last year, provided February rainfall materialises. Similar patterns were reported in southern Ghana, where rainfall has also been near or slightly above average, supporting crop prospects.

Futures Performance

ICE US Cocoa Futures (CC)

US cocoa posted a sharp technical rebound on Monday, recovering between 92 and 120 points across the main curve after Friday’s heavy liquidation. The move was driven primarily by short-covering and systematic dip buying, with no new fundamental catalyst. Price action suggests a classic mean-reversion bounce within an otherwise volatile but still structurally bullish market.

ICE London Cocoa Futures (C)

London cocoa followed New York higher but with a more muted recovery of 56–71 points, reinforcing its role as a secondary, reactive market. The rebound was largely technical in nature, reflecting positioning adjustments rather than fresh supply-demand information, and confirms that price leadership continues to sit firmly with the US contract.

Contango vs Backwardation

The US curve remains in strong contango. Mar-26 (4,324) trades well below May-26 (4,388), Jul-26 (4,456), Sep-26 (4,520) and Dec-26 (4,552). The front-to-back spread (Mar–Dec) sits at +228 points, signalling that the market is still pricing ongoing physical tightness and high risk premiums further out the curve. This is not a spot shortage structure — it is a risk-loaded forward curve, consistent with inventory stress and unresolved supply uncertainty for the 2025/26 season.

London shows the same configuration, with Mar-26 (3,067) below Dec-26 (3,192), producing a Mar–Dec spread of +125 points. The curve is smoother and flatter than New York but still firmly in contango, indicating that European buyers are also paying a forward scarcity premium. There is no backwardation anywhere on the main curve, confirming that the market is not experiencing immediate delivery panic, but remains structurally tight on a multi-quarter horizon.

Calendar Spreads

ICE US Cocoa (CC)

The front spread (Mar–May) remained completely stable, confirming no immediate stress in nearby physical demand. However, the Mar–Dec spread narrowed by 21 points, meaning the back end fell more than the front during the sell-off and did not fully recover. This is a classic sign of long-dated risk premium being unwound, not spot market tightening. The structure still prices long-term scarcity, but with reduced conviction.

ICE London Cocoa (C)

London front spreads widened sharply into deeper contango, indicating weak nearby demand and active rolling pressure from commercials. The slight narrowing in Mar–Dec reflects the same dynamic as New York: forward scarcity is still priced, but the market is de-risking the tail of the curve.

US–UK Spread

4,324 − (3,067 x 1.3684$/£) = 128USD (up from 116USD)

Volume & Open Interest

ICE US Cocoa Futures (CC)

January data shows a very aggressive build-up of positions in New York, with total open interest rising from roughly 126k at the start of the month to nearly 146k by January 23. This expansion occurred during the high-volume phase of the rally between January 8–14, when daily turnover repeatedly exceeded 60k–80k contracts, indicating strong speculative participation. Since mid-month, volume has steadily declined while open interest remained elevated, creating a classic crowded-trade structure. Monday’s rebound on January 26 came on relatively moderate volume and without new OI data, strongly suggesting short-covering within an already heavily positioned market rather than fresh long accumulation. This configuration leaves the US market extremely vulnerable to sharp, disorderly moves once liquidation pressure re-emerges.

ICE London Cocoa Futures (C)

In contrast, London has displayed a structurally different profile throughout January. Open interest remained broadly stable in the 160k–165k range, despite several volume spikes around major price swings. This indicates that most of the trading activity reflects commercial hedging, rolling, and physical-linked flows rather than speculative position building. Even during high-volume days, London failed to generate sustained OI expansion, confirming that it is redistributing risk rather than accumulating it. The decline in volume into January 26 reinforces that London remains a reactive, flow-driven market, with price direction continuing to be dictated by New York positioning dynamics.

Seasonality Context

From a historical perspective (2000–2025), late January to mid-February is one of the most volatile periods of the cocoa calendar. This window typically coincides with three overlapping dynamics: peak arrival flow from the main West African harvest, heavy producer selling, and early positioning for the mid-crop. As a result, the market often experiences sharp counter-trend moves, false breakouts, and liquidation-driven swings rather than clean directional trends.

Statistically, this period has a bearish-to-neutral bias, with prices more likely to consolidate or drift lower than to resume strong uptrends. Sustained rallies in February usually require a clear weather shock or major demand surprise; absent that, the dominant pattern is range trading with declining momentum. In practical terms, the current price action fits the seasonal template almost perfectly: strong volatility, weakening trend strength, and fading conviction after a major speculative run.

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What to Expect Tomorrow

Short-term (intra-day):
The market is entering tomorrow in a technically fragile equilibrium. On the 5-minute and hourly charts, momentum indicators (RSI and stochastic) are rolling over from neutral levels, while MACD remains weak and below the zero line. This suggests that the rebound from last week’s low is losing steam, and price is vulnerable to renewed selling if early liquidity turns negative. Immediate support sits around 4,280–4,300, with a break likely triggering a fast move toward 4,150–4,200.

Medium-term (daily/weekly):
On the daily and weekly charts, the broader structure remains decisively bearish. The market is still in a well-defined downtrend from the November highs, with lower highs, declining OBV, and RSI stuck below 50. Any upside tomorrow is likely to be corrective rather than impulsive, with strong resistance clustered around 4,450–4,500. Unless a new fundamental catalyst emerges, the base case remains range-to-lower trading, dominated by volatility, stop-driven flows, and positioning stress rather than organic buying.

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.