Cocoa down almost 2% below $7000 level amid African rainfalls 📉

Cocoa prices have fallen more than 40% since peaking at nearly $13,000/tonne in 2024, now trading below the key, psychological and technical zone $7,000/tonne.

• The drop comes as supply expectations improve and demand weakens, reversing last year’s rally fueled by drought, crop disease, and poor harvests in West Africa.

• Higher rainfall and tree blossoming in the Ivory Coast and Ghana are boosting production forecasts, easing fears of shortages.

• West Africa, responsible for 70% of global cocoa output, is expected to see rebounding harvests after last year’s severe weather and disease-driven slump.

• High cocoa prices combined with U.S. tariffs on chocolate risk further dampening consumer demand.

• Analysts see this as an additional headwind for prices heading into 2025.

• Rising production this year will significantly increase supply, helping correct the imbalance that drove prices higher in 2024.

• Rabobank expects a significant surplus in the 2025/26 season, with production gains across Ecuador, Brazil, Peru, Nigeria, and Cameroon, alongside recovery in West Africa.

• Cocoa prices are projected to trend gradually lower in the short and medium term, despite the potential for short-lived rebounds.

• Limited supply risks in the Ivory Coast and Ghana should keep prices above $3,000/tonne, even in a bearish scenario.

Looking at the cocoa chart, we can see the head and shoulders pattern, with futures prices now in line with the potential 'neckline' in the formation.

Source: xStation5

Source: xStation5