Cocoa futures dump 6% amid heavy rains in West Africa 📉
Cocoa futures on ICE (COCOA) are losing almost 6% today, pressured by heavy rains in West Africa, which may increase the supply from key-growing regions. Easing supply concerns leads today to a wild market move and the largest cocoa price drop since months. The outlook for additional rainfall in West Africa may significantly improve this year African cocoa crop.
- Weather forecasts are calling for showers to continue through the week in both key cocoa producing countries: Ivory Coast and Ghana (the two largest cocoa-producing economies).
- Despite the recent rain, drought in West Africa still covers more than a third of Ghana and the Ivory Coast (African Flood and Drought Monitor data).
- After falling to a 21-year low of 1,26 mln bags on January 24, ICE-monitored cocoa inventories held in US ports rebounded significantly, climbing to an 8-3/4 month high of 2,26 mln bags according to the largest ICE inventories reading.
COCOA (H1 interval)
Cocoa drops today to $9600, testing 23.6 Fibonacci retracement of the latest downward wave from May. Traders such watch out to the upcoming cocoa futures rollover (10 June 2025).
Source: xStation5
Recently, the spread between the nearest contracts has widened significantly, indicating short-term spot market demand. At the same time, lower prices for the September contract may reflect greater certainty about higher supply. Source: Bloomberg Finance LP, XTB
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