Daily Cocoa Market Report (27 Feb 2026): Cocoa Market Faces Growing Surplus Outlook as Demand Concerns Deepen

On Friday, cocoa futures fell sharply, with ICE US declining nearly 6 percent and London falling around 5 percent, reinforcing the bearish tone. With speculative positioning net short, certified stocks rising in the US, and surplus expectations building, the market remains structurally cautious heading into April’s grindings data.

The global cocoa market is increasingly pricing in a shift toward surplus for the 2025/26 season, as multiple industry analysts project production recovery alongside sustained demand weakness.

Hedgepoint has forecast Ivory Coast production at 1.78 million metric tons for the 2025/26 season, with Ghana expected to produce 650,000 tons and Ecuador 615,000 tons. The firm estimates a global surplus of 365,000 metric tons for the upcoming crop year. Hedgepoint also anticipates continued demand pressure through the remainder of the current season.

Other institutions present similar surplus expectations. TRS projects a 154,000 metric ton surplus, while CRA forecasts a 351,000 ton surplus. StoneX estimates a 287,000 ton surplus. While the magnitude varies, consensus is building around a return to supply expansion following recent deficit-driven volatility.

Demand dynamics remain a central concern. Analysts at BMI argue that the sustained reduction in cocoa consumption reflects structural erosion rather than cyclical softness. They attribute this to product reformulations, including reduced cocoa content and substitution with alternative ingredients. The next global grindings report, due in April, will provide critical confirmation of demand trends.

In the futures market, cocoa prices continue to weaken. CRA has set a target price of £2,000 per ton for cocoa in London, while 2026 futures are currently averaging around £2,107 per ton. The proximity of market pricing to regulatory benchmarks underscores the shifting balance toward surplus expectations.

At the same time, Ivory Coast has brought forward the opening of the mid-crop season to March 1, reflecting deteriorating bean quality as early as February. While agronomically justified, the move exposes deeper stress within the sector. Many Ivorian exporters are holding significant inventories purchased at the official price of CFA 2,800 per kilogram. Including collection, transport, financing, and port costs, export parity levels now exceed prevailing global market prices. As futures decline, these stocks have become difficult to place without substantial financial losses. Exporters with contracts due by the end of March face heightened default risk, raising concerns about liquidity stress and potential consolidation within the sector.

Futures Performance

ICE US Cocoa (CC)

In the US market, losses ranged from -5.92% in Mar-26 to -4.76% in Dec-26, with an average decline of approximately -5.3% across the first five contracts. The front month absorbed the heaviest percentage loss, but the relatively parallel structure of the decline suggests this was not a curve reshaping event. Instead, it reflects strip-wide risk reduction. The fact that declines tapered slightly toward the back end indicates mild front-end pressure, yet the uniformity of the move confirms macro-driven or fund-led selling rather than physical market stress.

In ICE US cocoa (CC), spread volume represented roughly 56% of total trading activity (27,014 of 47,749 lots), indicating heavy calendar repositioning rather than pure directional panic. By contrast, EFP activity was minimal at just 295 lots, and EFS was almost nonexistent at 15 lots. This combination suggests that the decline was driven by futures-based fund liquidation and curve management, not by physical hedging pressure or swap market stress. There is no evidence of origin supply strain or aggressive commercial transfer of risk.

ICE London Cocoa (C)

London cocoa mirrored this pattern, declining between -5.09% (Mar-26) and -4.14% (Dec-26), averaging roughly -4.6% across the same segment of the curve. The magnitude was slightly less severe than in New York, but the synchronized nature of the move confirms this was not currency distortion or exchange-specific positioning. It was coordinated liquidation across both markets.

In ICE London cocoa (C), spread volume was also elevated at approximately 47% of total volume, again pointing to structured repositioning across the curve. However, the key difference was EFS activity, which reached 11,926 lots, about 27% of total volume. That level of exchange-for-swaps activity indicates significant swap desk and institutional repositioning, likely tied to macro fund de-risking or structured product adjustments. EFP activity remained modest at 1,334 lots, suggesting limited physical market urgency.

Contango vs Backwardation

The cocoa curve remains in contango across both ICE US and ICE London contracts. Deferred months continue to trade at progressively higher prices than the nearby contracts, even after the sharp 27 February decline. The parallel nature of the selloff preserved the upward-sloping term structure rather than flattening or inverting it.

US–UK May Spread

$2,898 − (2,061 x 1.348$/£) =$119 ton (down from $198/ton)

Volume and Open Interest

ICE US Cocoa (CC)

From 23 February to 26 February, open interest increased sharply from 169,332 to 185,549, an addition of more than 16,000 contracts in just three sessions. That is aggressive positioning expansion. Volume during those days was not extreme, meaning the rise in open interest reflects net new positions rather than simple turnover.

This matters because the 27 February price collapse occurred immediately after that rapid build in exposure. When open interest rises into a market and price then falls sharply, it usually signals one of two things. Either newly established longs are under pressure and forced to liquidate, or fresh short positions are entering aggressively.

Given that the February trend was one of accumulation and not persistent decline, the structure suggests the market became crowded on the long side. The 5 percent drop on 27 February likely represents the start of position stress. If open interest contracts in subsequent sessions, that confirms long liquidation and can accelerate downside momentum. If open interest instead continues rising while price falls, that would indicate fresh short establishment and potentially extend the bearish trend.

ICE London Cocoa (C)

London shows a similar late month pattern. Open interest increased steadily into 26 February, reaching 218,163. The expansion into the final week was persistent and not accompanied by extreme volume spikes, which suggests controlled accumulation rather than panic trading.

On 27 February, price declined sharply while volume remained within recent averages. That combination implies active repositioning rather than disorderly panic. Given the elevated swap related activity that day, institutional participants were likely adjusting exposure.

COT Analysis

As of 24 February 2026, the Commitments of Traders data reflects a structurally bearish speculative positioning profile across both ICE Europe and ICE US cocoa futures.

In ICE US cocoa, total open interest is 241,934 contracts. Non-commercial participants hold 32,913 longs and 45,055 shorts, yielding a net short position of 12,142 contracts, alongside 99,854 spread positions. Commercials are net long 10,850 contracts, holding 97,514 longs versus 86,664 shorts, reflecting risk absorption into price weakness. Importantly, open interest increased by 26,664 contracts during the reporting week. The combination of expanding open interest and a falling price environment suggests fresh short positioning rather than pure long liquidation, reinforcing downside momentum.

In ICE Europe, total open interest stands at 313,740 contracts. Managed money holds 7,143 long positions against 32,822 short positions, resulting in a net short exposure of 25,679 contracts. This represents a materially skewed speculative bias to the downside and is the dominant directional force in the market. Producers and merchants are modestly net short, with 112,810 longs versus 122,614 shorts, a net short of 9,804 contracts, suggesting limited urgency from the commercial side to secure forward supply. Swap dealers are net long 9,049 contracts (51,625 longs versus 42,576 shorts), likely intermediating speculative flow rather than expressing directional conviction. Overall, the European market structure is defined by concentrated managed money short exposure.

Cocoa ICE Stocks

US certified cocoa stocks have risen sharply since early January, increasing from 193,405 bags on 7 January to 514,433 bags by 27 February. That represents a gain of more than 321,000 bags, or roughly 166 percent in less than two months. The acceleration became particularly pronounced in February, with stocks nearly doubling from early-month levels. In the final two sessions alone, stocks increased from 498,388 on 26 February to 514,433 on 27 February, a single-day rise of 16,045 bags. This aggressive expansion in deliverable supply occurred as futures prices were breaking lower, reinforcing a structurally bearish backdrop. Rising certified stocks reduce the probability of front-end tightness and support the persistence of contango.

In contrast, European total bags declined modestly from 591,250 on 26 February to 580,313 on 27 February, a drop of 10,937 bags. While this drawdown is noticeable, EU inventories remain elevated overall and have largely fluctuated within a broad range throughout February. The decline does not meaningfully offset the substantial US stock build, especially given that ICE US cocoa remains the primary delivery benchmark.

Stock-to-Grind ratio

In the United States, certified stocks represent 32.52 percent of annual grind, equivalent to approximately 119 days of grinding coverage.

European stock to grind ratio stands at just 2.8 percent, equivalent to roughly 10.2 days of grinding coverage.

These figures refer only to ICE Deliverable Stocks (Exchange-Visible)

What to expect on Monday

For Monday, the most likely scenario is an early bounce attempt toward the 2,920 to 2,960 resistance zone, driven by the deeply oversold daily RSI and short-term stabilization. However, unless price can reclaim and hold above the 1-hour 20 and 50 moving averages in the 2,960 to 3,000 area with expanding volume, any rally should be viewed as corrective within a broader downtrend. If 2,880 breaks decisively, downside continuation toward 2,820 and potentially 2,750 becomes likely as stops are triggered. Overall, volatility should remain elevated, and while a short-term relief bounce is probable, the dominant structural bias remains bearish until resistance levels are clearly reclaimed.