Daily Cocoa Market Report (30 Dec 2025): Post-Holiday Liquidation Reverses Early Week Gains as Thin Liquidity Drives Volatility

On Tuesday’s session, cocoa futures retraced significant gains made on Monday amid sharply reduced liquidity in the holiday period. Front-month March-26 cocoa on ICE U.S. closed down –166 points to 6,089 after climbing on Monday, while ICE London March-26 cocoa settled –115 points lower at 4,376. The declines were broad across the curve, extending from prompt to deferred contracts. Prices weakened despite underlying supply tightness remaining a structural theme, as short-term positioning shifted toward profit-taking and risk aversion in a low-turnover environment.

CCC’s announced plan to buy around 200,000 metric tons of cocoa from farmers is equivalent to roughly 20,000 ICE futures contracts (at 10 tons per contract) if hedged through futures markets. In comparison, the confirmed re-introduction of cocoa into the Bloomberg Commodity Index (BCOM) beginning January 2026 could generate passive institutional flows in the range of 30,000 to 33,000 ICE cocoa contracts, based on an estimated $1.8–$2.0 billion index-tracking allocation and a contract notional value of approximately $60,000 at $6,000 per ton. This means the index inclusion alone could create a larger mechanical futures buying requirement than CCC’s entire physical offtake volume, adding structural, price-insensitive demand that arrives predictably in calendar-driven waves, unlike CCC’s operational purchases, which will likely be staggered as farmer deliveries are collected and hedges placed progressively along the curve. Together, these two forces represent a net futures demand shock that tightens origin basis markets, reduces spot availability, stabilizes trend structure above key moving averages while the 6,050–6,063 floor holds, and increases the probability of a test — or breakout — in the 6,108–6,120 zone. If the market fails to absorb index flows at that battlefield, short-covering cascades and liquidity sweeps could amplify price acceleration beyond 6,180, or, alternatively, trigger sharp volatility around the 200-MA as positioning resets into year-start rebalancing flows.

Futures Performance

New York Cocoa (ICE US)

London Cocoa (ICE Europe)

Both ICE U.S. and ICE Europe cocoa reversed lower on 30-Dec, breaking the first layer of post-holiday support as nearby longs exited into year-end. The first four contracts in New York fell between -151 and -172 points, with March-26 closing at 6,089 (-166), while London’s equivalent tenors declined -115 to -122 points, led by March-26 at 4,376 (-115). The synchronized, curve-wide retreat confirms the move was driven by technical position reduction, not contract-specific hedging or physical market stress. With certified stocks steady in the UK and only a marginal rise in U.S. inventories, the structure remains fundamentally tight but tactically vulnerable until liquidity normalizes in early January. Near-term bias stays bearish-neutral unless NY reclaims 6,150+ on meaningful volume.

Contango/Backwardation

The cocoa curve currently reflects a mild contango in nearby months, indicating the market is pricing term premium for carry trades and inventory financing rather than immediate supply scarcity at the contract level. No sustained backwardation is present, meaning prompt contracts are not trading above deferred months — a signal that physical tightness remains a structural concern, not a delivery-crisis condition. A shift into backwardation would require a catalyst strong enough to invert the curve, typically driven by acute supply shock or aggressive commercial demand for prompt coverage. Until then, the curve favors carry economics over front-month stress.

US–UK Spread

$6,089−(4,376£×1.346$/£)=$199 (up from $188)

Volume and Open Interest Dynamics

New York Cocoa (ICE US)

Volume was essentially flat into Tuesday (29,295 vs 29,251), which is consistent with a market that is still trading but in thin holiday liquidity. Monday’s rally aligned with a net increase of 581 contracts in exchange open interest, implying the advance had participation from fresh market entrants rather than short-covering alone. The subsequent weakness could reflect speculative profit-taking after a two-week expansion of long exposure, or a renewed presence of the Cocoa regulator’s stabilization buying program, which previously signaled intentions to absorb ~200,000 mt of farmer supply after the earlier price slump temporarily sidelined exporters and reduced near-term export availability.

London Cocoa (ICE Europe)

UK turnover contracted into Tuesday (15,471 vs 17,274), reflecting predictable post-holiday liquidity softness. Open interest held elevated through 29-Dec (160,211) before the 30-Dec row, which carries no new OI print. The clean read is that hedgers remain anchored while tacticals trim risk rather than flip the curve, keeping London carry-priced, structurally hedged, and technically driven into the New Year threshold.

Certified Stocks

U.S. certified stocks ticked modestly higher on the latest update, reflecting inflows post-holiday. UK stocks remain unchanged from late Christmas week, indicating limited physical flows through the London warehouse system in late December.

What to Expect Tomorrow

For tomorrow, expect the market to push into the 6,108–6,120 zone where the 200-period moving average converges with prior supply; this is the magnet and the decision point. If price holds above 6,063 on an H1 closing basis and momentum indicators remain constructive, the recovery leg should extend with a high probability of tagging that band and potentially probing 6,180 if volume expands. A failure to reclaim or sustain 6,120 followed by a clear rejection candle on H1 would shift control back to sellers and open the path to 5,920 and 5,880. The bounce remains valid while 6,050–6,063 holds; losing that floor overnight would signal the rebound was liquidity-driven rather than directional. In short, 6,120 is the battlefield, 6,108–6,120 is the most likely test zone, and the reaction there will define whether upside continuation or trend rejection plays out next.

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.