Daily Cocoa Market Report (9 Jan 2026): Index Euphoria Meets Liquidation Reality

Cocoa prices suffered a sharp and disorderly reversal on Friday, plunging as much as 13% intraday, as exporter hedging overwhelmed index-related buying and triggered a broad liquidation of speculative length. What began earlier in the week as a rally driven by expectations of commodity index rebalancing rapidly unraveled once higher prices incentivised origin sellers and exporters to lock in forward sales. With speculative longs crowded into the same narrative trade, the market quickly became one-sided, resulting in forced selling, stop-loss cascades, and the heaviest trading volumes seen in nearly two years. The move wiped out all gains tied to index anticipation and dragged prices back to late-November levels, reinforcing a broader pattern seen over recent months in which rallies have consistently been met by aggressive selling amid still-challenging demand conditions, exporter pressure, and unresolved logistical and financing strains across West Africa, particularly in Ghana.

Adding to the downside pressure, conditions in Ghana’s internal buying system have deteriorated sharply, according to market participants. The second phase of the 2025/26 crop season is being met with renewed financing stress, prompting many Licensed Buying Companies (LBCs) to pause normal pre-financing operations used to source cocoa from upcountry. With global prices falling and uncertainty over potential producer price adjustments, European buyers are reportedly pressing Ghana to lower cocoa prices, while simultaneously considering alternative origins if terms are not revised. As a result, several major buyers have scaled back or temporarily halted purchases since the Christmas holidays. In response, the Cocoa Marketing Company of the Ghana Cocoa Board has stepped in to receive cocoa directly from upcountry, while LBCs delay district-level operations amid fears of price reductions. This disruption is slowing evacuation flows, tightening cash availability for farmers, and reinforcing broader supply-chain strain, underscoring that the latest price collapse reflects financial stress and hedging dynamics rather than a sudden improvement in physical market conditions.

Further reinforcing the corrective nature of the move, the market is now reversing a narrative-driven rally linked to misinterpreted supply signals from Côte d’Ivoire. Lower-than-expected bean deliveries at Ivorian ports had been taken as evidence of tightening supply, helping fuel speculative buying earlier in the week. However, Judy Ganes, president of J. Ganes Consulting, noted that the slowdown in port arrivals was more likely the result of logistical bottlenecks rather than a genuine supply shortfall. As that distinction became clearer, the bullish crop narrative quickly unraveled. “People bought into this idea that there was a crop problem,” Ganes said. “Now, it’s kind of back to reality.” The reassessment removed a key support for speculative length and accelerated the liquidation once financial and hedging flows turned decisively negative.

Futures Performance

US – ICE Cocoa Futures (CC)

UK – London ICE Cocoa Futures

Friday’s cocoa session marked a decisive unwind of the prior day’s speculative excess, with price action conforming to a classic liquidity-driven blow-off followed by forced liquidation, rather than any change in underlying physical fundamentals.

The move began with Thursday’s index-narrative rally tied to renewed positioning around cocoa’s anticipated re-inclusion in the Bloomberg Commodity Index. That theme drew in systematic and momentum-sensitive flows, temporarily compressing liquidity and driving prices sharply higher across both ICE London and ICE US contracts. However, the rally was structurally fragile: it lacked follow-through volume at the highs and was not supported by durable fundamental information on supply, grind, or origin flows. That fragility was compounded by a subsequent reassessment of West African supply signals, after Judy Ganes, president of J. Ganes Consulting, noted that lower-than-expected port arrivals in Côte d’Ivoire—initially interpreted as evidence of tightening supply, were more likely the result of logistical bottlenecks rather than a genuine crop shortfall.

On Friday, the market opened with immediate rejection of elevated price levels, triggering mechanical de-risking. As prices slipped back below key intraday and short-term technical levels, CTA and momentum models flipped from accumulation to distribution, accelerating downside pressure. The resulting sell-off was self-reinforcing, as stop-loss clusters and intraday VAR constraints forced additional liquidation into thinning bid depth.

The uniformity of losses across the forward curve is notable. Front-month and deferred contracts both suffered heavy declines, indicating that this was not a calendar-spread or structure-driven move, but rather a broad reduction in gross long exposure. The absence of curve inversion or selective back-end resilience confirms that funds were exiting risk wholesale rather than expressing a revised view on medium-term supply tightness.

Contango / Backwardation

The liquidation also had a meaningful impact on curve structure, offering additional insight into the nature of the sell-off. Prior to the break, the cocoa curve had been exhibiting incipient backwardation in the front months, reflecting tight nearby availability, elevated financing stress, and aggressive speculative length concentrated at the front of the strip.

Friday’s forced liquidation flattened that backwardation rather than flipping the curve decisively into contango. Front-month contracts absorbed the bulk of the selling pressure, compressing nearby spreads and easing prompt tightness premiums, while deferred contracts declined more proportionally and retained relative value. This behaviour is consistent with long liquidation in benchmark-heavy maturities, not a structural reassessment of medium-term supply balance.

Importantly, the curve did not develop a steep contango, which would normally signal surplus expectations, comfortable inventories, or aggressive producer hedging. Instead, the post-selloff structure points to a market that has temporarily de-risked positioning while still pricing residual scarcity further out the curve. Carry costs and financing are not being actively rewarded, indicating that physical holders remain reluctant sellers at current levels.

US–UK Spread

5,312 − (3917 x 1.343$/£) = 51 USD (down from 211 USD)

Volume and Open Interest Analysis

ICE US – CC Cocoa Futures

US cocoa volumes expanded aggressively into the sell-off, with total volume surging to 82,465 lots on 09-Jan, the highest level in the observed period and more than 30% above Thursday’s already elevated activity. This confirms that Thursday’s index-driven inflows were met on Friday by forced de-risking and systematic position reduction.

Open interest data for 09-Jan was not yet published at the time of the report . However, the combination of collapsing prices and record volume strongly implies net OI contraction, consistent with long liquidation rather than fresh short initiation.

ICE London – C Cocoa Futures

London volumes also expanded materially, with 45,333 lots traded on 09-Jan, up sharply from 28,402 on 08-Jan and more than double early-January averages. Unlike the US market, London cocoa typically exhibits lower absolute volume, making this spike particularly significant.

Open interest in London had been steadily rising into 08-Jan, reaching 163,715 contracts, indicating that speculative length had been building across the curve.

Certified Warehouse Stocks

What to Expect on Monday

Monday’s cocoa price action is expected to shift from outright liquidation into a stabilisation and mean-reversion phase, rather than extending Friday’s sell-off in a straight line. The market closed deep into oversold territory across intraday and daily timeframes, with momentum indicators stretched and selling pressure no longer accelerating, a configuration that typically precedes a pause or short-covering bounce. Early trade may still probe the downside as residual stops are tested, but unless prices break and hold below the 5,200 area, downside follow-through should be limited. The more likely outcome is a volatile, two-sided session characterised by range trading and partial retracement toward the 5,450–5,550 zone, potentially higher if liquidity conditions allow. Any upside, however, should be viewed as corrective rather than trend-reversing, with the broader market needing time to absorb the liquidation and rebuild structure before a clearer directional signal emerges later in the week.

As a reminder, the combination of elevated trading volume, rising open interest, and a decisive break of key support or resistance levels is often characteristic of a developing trend reversal rather than a transient volatility event.

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.