Daily Cocoa Market Report (6 Jan 2026): Slight Volume Recovery, Sideways Market Persists

Cocoa futures in both the UK and US markets corrected on 6 January, reflecting a broad, front-led liquidity rotation rather than a structural shift in fundamentals or curve inversion. The UK curve gave back ground in an orderly manner, with March-26 down 1.22%. The US front corrected more firmly, with March-26 slipping −1.45%. In both curves, declines were synchronized across maturities, and spread volume remained robust, confirming that the session was driven by participation normalization and calendar-spread risk cycling.

The slowdown in Ivory Coast port deliveries aligns with recent permit-restricted transport pacing, which has throttled arrival velocity independent of crop expectations, while origin markets remain in a holding pattern ahead of index rebalancing dynamics and mid-season yield confirmation. With Q4 global grind data due from 15 January onward, the market faces a layered fundamental reset that could redefine near-curve pricing sensitivity, making the next catalyst window more structural than seasonal.

The European Cocoa Association, International Cocoa Organization, Indian Jute Industry's Research Association, and Fairtrade Commission have jointly launched an STDF-funded project to replace the obsolete IJO 98/01 jute standard with direct MOH specifications—capping MOAH at 25 mg/kg and MOSH at 250 mg/kg jute, measured via advanced analytical methods rather than the current unreliable proxy test that shows virtually no correlation with actual contamination. The old standard's reliance on unsaponifiable material (USM) measurement has been proven scientifically worthless, as "food-grade" vegetable oil–treated bags show no difference in mineral oil levels compared to untreated bags, creating compliance risk for cocoa exporters as EU regulatory limits tighten. Led by Michiel Kokken (Chair of the Technical Working Group on MOH), the project was driven by research showing that approximately 55% of current jute bags fail to meet the proposed specifications, necessitating urgent action to maintain market access for West African cocoa producers and South Asian jute suppliers. Implementation will proceed through formalization as a revised IJO standard, Fairtrade contract clause, or EU regulation, paired with capacity-building support in producing countries to enable analytical testing and MOH prevention at origin, creating both compliance challenge and economic opportunity for jute manufacturers and cocoa-producing nations while establishing a template for multi-stakeholder standards development that may influence broader commodity regulations.

Futures Performance

US – ICE Cocoa Futures

The US cocoa curve on 6 Jan retraced from the prior session’s advances, with the front Mar-26 contract losing −1.45%, a sharper decline than its UK counterpart. May-26 and Jul-26 eased −1.08% and −1.09%, while the back of the active strip exhibited a more moderate retracement (Sep −0.96%, Dec −0.67%). This pattern reflects front-end sensitivity to profit-taking and short-term liquidity rotation, especially in the more active prompt maturities. The consistent declines across the board, paired with strong spread volume, point to a broad risk-off repricing without triggering structural backwardation in the curve.

UK – ICE London Cocoa Futures

On 6 Jan, UK cocoa futures gave back ground across the active curve, with front-month Mar-26 down 1.22% and the remainder of the first five maturities giving up −0.76% to −1.04%. The decline was broad-based and orderly, illustrating that today’s weakness was largely profit-taking and rotation rather than a fundamental break. The relatively tight range of percentage changes suggests calm curve repricing rather than an abrupt repositioning. Spread volume remained healthy, indicating calendar spread adjustments continued to attract participation as traders digested recent volatility.

Contango / Backwardation

US cocoa futures also remained in contango, anchored by the front March-26 at 5,989 USD. Premiums stair-stepped higher into the mid-curve (May/Jul/Sep) before easing in Dec-26, confirming a front-driven liquidity correction, not a physical squeeze. No contract sequence shows sustained backwardation.

The London cocoa curve held contango, with deferred contracts closing at similar or slightly higher levels than the front March-26 (4,294 GBP). Minor steps into May and September were marginal and reflect spread noise, not curve inversion. The structure remains carry-aligned and orderly, with no prompt scarcity pressure forcing backwardation.

US–UK Spread

5,989 − (4,294 × 1.350) = +191.10 USD (Unchanged)

Volume & Open Interest

US — ICE Cocoa Futures

The US cocoa complex carried significantly larger daily volumes than London, holding ~27k–30k lots/day across the full 5-day window, confirming deep front-strip participation and high flow velocity. Open interest remained flat into 5 Jan, indicating that the rally into early January was driven by rapid fund rotation and spread recycling rather than net new outright exposure. Because 6 Jan OI is not reported, exposure change cannot be confirmed for the final session, but the pattern into 5 Jan reflects a front-led liquidity regime, not a prompt physical squeeze propagating backwardation. Momentum and participation are strongest where liquidity is deepest, leaving the US curve more reactive but not structurally scarce.

UK — ICE London Cocoa Futures

London cocoa volumes recovered progressively after year-end compression, culminating in a strong 18,419 lots on 6 Jan, signaling a post-holiday liquidity surge at the prompt end of the curve. Open interest built modestly but consistently into 5 Jan (+1,064 contracts from 30 Dec → 5 Jan), confirming measured exposure growth led by commercial carry behavior, not speculative urgency. The absence of 6 Jan OI prevents validation of whether the latest volume spike created or rotated exposure, leaving front-end commitment indeterminate for the final session, but curve structure remains orderly, carry-supported, and not inverted into backwardation risk.

Warehouse Inventory

Certified cocoa stocks at US ICE warehouses declined by 4,286 bags (−0.26%) on 6 January, a minor draw that confirms no meaningful inventory pressure developing at the prompt end, consistent with a liquidity-driven futures correction rather than physical tightness. The UK inventory was unchanged, showing no new certified inflow or stock draw, reinforcing inventory stability under the London curve. The small US stock reduction keeps both markets in a comfortable stock-to-grind coverage regime, offering no mechanical justification for backwardation formation or prompt scarcity repricing.

What to Expect Tomorrow

US cocoa futures appear to be in a corrective, basing phase after last year’s sharp spike, with price now fluctuating around 5,900–6,000 just above the key 200‑week moving average, which acts as important medium‑term support and marks the first real stabilization attempt since the crash. On the daily chart the strong downtrend has flattened into a sideways‑to‑slightly‑up channel between roughly 5,500 and 6,400, while the 20‑ and 50‑day moving averages are starting to curl higher, reinforcing the idea of consolidation rather than fresh downside momentum. Momentum indicators such as RSI sit in the mid‑40s to low‑50s on both daily and weekly timeframes, consistent with a neutral, range‑bound market, and MACD plus Stochastics show frequent mid‑range crosses that signal choppy trading rather than a clean trend. Intraday (hourly and 5‑minute) price action repeatedly mean‑reverts around the 200‑period moving average with spikes both above and below, and OBV has flattened alongside moderate daily volume, suggesting that heavy distribution has cooled and two‑way trade dominates. Technically, the 5,700–5,800 zone is crucial support—losing it on a weekly closing basis would reopen room toward about 5,200–5,300—while resistance is clustered around 6,300–6,400 and then up to roughly 7,000, so for now the structure favors range tactics (buying dips near support and fading strength near resistance) until a decisive weekly close above about 6,400–6,500 confirms a more durable bullish reversal or a break below 5,700 signals that the broader corrective down‑leg is not yet finished.

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