Chart of the day 🚩 Cocoa rebounds despite rising ICE inventories and improving weather in Africa

Cocoa futures have recently fallen to nearly $5,500 per tonne from around $6,500, levels last seen in December 2025. The sell-off was driven by profit-taking and the liquidation of long positions after signs of abundant cocoa supplies from Côte d'Ivoire, the world's largest producer. Today's rebound appears to be largely technical, even as the weather outlook for West Africa continues to improve.

• Data released on July 10 showed that farmers shipped 2.07 million metric tonnes of cocoa to ports between October 1, 2025, and July 5, 2026, representing a 21% year-over-year increase. At the same time, ICE-monitored cocoa inventories have climbed to their highest level in nearly two years.
• High cocoa prices continue to weigh on demand. Global cocoa grindings remain under pressure as chocolate manufacturers struggle to pass elevated raw material costs on to consumers.
• Rainfall is currently increasing across Ghana and Côte d'Ivoire and is expected to continue, supporting cocoa tree development. Together, these two countries account for roughly 60% of global cocoa production. Favorable rainfall is also being observed in East Africa, further improving production prospects.
• Rainfall remains more scattered and less favorable in cocoa-growing regions of Indonesia and Malaysia, although these countries play a much smaller role in global cocoa supply than Ghana and Côte d'Ivoire. Meanwhile, seasonal dryness persists in Bahia, Brazil, but Brazil's importance in the global cocoa market is significantly lower.

COCOA Chart (D1)

Looking at the daily chart of ICE cocoa futures, prices have rebounded from a recent local low and recovered part of the losses after declining by more than 10% over the past several sessions. Key resistance lies in the $6,450-$6,700 per tonne area, corresponding to the recent highs and the 38.2% Fibonacci retracement of the latest decline. Initial support is located around $5,000-$5,200 per tonne, where the psychologically important round number coincides with the 200-day exponential moving average (EMA200) and the 23.6% Fibonacci retracement.

Source: xStation5

What does the latest CoT report show? Funds are reducing bearish bets while producers continue to hedge

The latest Commitments of Traders (CoT) report for cocoa futures (as of July 7) reveals an interesting divergence between the market's largest participants. On one side, Commercials—producers, merchants, and companies involved in the physical cocoa trade—remain heavily positioned for lower prices through their hedging activity. On the other, Managed Money, which includes hedge funds and other large speculators, has started to reduce its short exposure.

• Commercials currently hold a net short position of approximately 23,500 contracts. During the latest reporting week, they increased both long and short positions, although short hedges grew at a faster pace. This is typical behavior for cocoa producers, who use periods of elevated prices to lock in future selling prices. As a result, growing commercial short positions should not automatically be interpreted as a bearish directional view, but rather as a normal risk management strategy.
• The behavior of Managed Money is arguably more noteworthy. Although hedge funds remain net short by roughly 5,900 contracts, they increased long positions while covering more than 3,300 short contracts during the reporting week. This suggests that speculative funds are not aggressively positioning for another major decline but are instead reducing previously bearish exposure and lowering portfolio risk.
• At the same time, open interest increased by more than 11,000 contracts, indicating that fresh capital is entering the market rather than the recent move being driven solely by existing participants closing positions. Combined with improving supply prospects in West Africa, rising cocoa arrivals from Côte d'Ivoire, and weaker demand from the chocolate industry, the latest CoT data points more toward an ongoing correction following last year's rally than clear confirmation of the beginning of a long-term bear market.

While cocoa fundamentals have improved noticeably on the supply side, the positioning of the largest speculative participants does not yet reflect strong conviction that prices are entering a prolonged multi-month downtrend. Stronger confirmation of such a scenario would likely require future CoT reports to show a renewed build-up of speculative short positions alongside continued improvement in market fundamentals.

Source: CFTC, Commitments of Traders