Cocoa Market Call Summary: Market Overview and Outlook for the New Cycle

After reaching their lowest level in a year, front-month contracts closed the week of October 3 at 6,190 USD/t in New York and 4,288 GBP/t in London, with weekly reductions exceeding 10%. Against this backdrop, Hedgepoint Global Markets launched discussions on one of the most challenging markets of recent years during its first Cocoa Market Call on September 30, bringing an outlook on the main factors currently driving prices.

Macroeconomic Context

In the United States, the economy has been reflecting the potential impact of tariffs imposed on key trading partners. The move has kept inflation under pressure and, combined with a slowdown in the labor market, led the Federal Reserve to deliver its first rate cut in September, with the possibility of further adjustments later this year. This monetary policy shift affects domestic activity and demand, and through the dollar, the performance of other currencies, directly influencing commodity markets. In Europe, the ECB kept rates unchanged in a relatively more stable environment, although risks linked to US tariffs, fiscal pressures in Germany, and political uncertainty in France remain on the radar.

Fund positioning in cocoa remains cautious, in line with the more uncertain macroeconomic environment. Until now, prices have been reacting mainly to technical factors, reflecting market adjustments. In recent days, however, the increase in farmgate prices in Ghana and Ivory Coast encouraged stronger deliveries, adding supply pressure and contributing to this week’s correction.

US Imports

Despite elevated prices, US net cocoa imports rose nearly 70% compared with last year, returning to levels closer to the historical average. The result points to resilient demand and suggests support for grindings in the region, which showed the smallest contraction among the main processors in Q2.

From January to July, the composition of these imports shows significant changes. Ecuador accounted for around 30% of total beans received, compared with a five-year average of only 13%. This increase came alongside a lower share from Ivory Coast and Ghana and is also visible in ICE US certified stocks, which now reflect a more diversified origin profile, including Colombia, Papua New Guinea, Peru, and Venezuela.

This trend, initially explained by reduced supply from key origins, could be reinforced by trade policy decisions. Cocoa was included in the list of potential tariff exemptions in the United States, but implementation will depend on negotiations with partners, cases such as Ecuador, Malaysia, and Indonesia. As a result, tariffs could intensify changes in trade flows and competitiveness for cocoa products from countries like Brazil and India.

In addition to trade policy effects, prices have also influenced flows. Between January and July, cocoa butter’s share of US imports rose from 15% in 2024 to 20% in 2025, while powder declined from 17% to 15%, likely reflecting the higher relative price of powder.

EU Imports

In the European Union, the picture is different. The accumulated net volume is still almost 5% below the previous year, although the difference has narrowed since the beginning of 2025. The preference for higher quality African almonds keeps costs high, as Ivory Coast and Ghana have higher differentials compared to other origins.

Assessing demand, second-quarter grinding figures confirmed a decline in all regions, with greater resilience in the United States, sustained by stronger imports. Europe, in turn, experienced a more pronounced decline, reflecting lower imports in an environment of higher costs. The market now turns its attention to the next releases, scheduled for mid-October, which will be key to calibrating demand expectations at the start of the new cycle.

Supply and Weather

Initial forecasts for the 2025/26 crop indicate a possible surplus, but the volume of this surplus will depend on a balanced water regime in the coming months. The NOAA/CPC has raised the probability of La Niña occurring between October and December to 71%, a phenomenon that tends to bring more moisture and mild temperatures to West Africa, reducing the risk of water stress during the dry season. One point of concern, however, is the impact of La Niña on the harmattan winds, dry, dust-laden currents that can compromise fruit development. In Ecuador, La Niña may reduce rainfall at the beginning of the rainy season, increasing the need to pay attention to soil moisture.

Although the 2024/25 season is once again heading for below-average cumulative rainfall, as in the previous cycle, the occurrence of rainfall at critical periods has favored a higher fruit survival rate. This factor, combined with the recent increase in prices paid to producers in Ghana and Ivory Coast, reinforces expectations of greater grain availability at the beginning of the 2025/26 crop. Still, the weather remains a determining factor: unfavorable conditions in the coming months could reduce delivery potential in West Africa both at the end of the main crop and at the beginning of the mid-crop (April 2026). On the immediate supply side, ICE certified stocks, although recovering from the lows seen at the beginning of the year, remain well below the historical average.

Spreads in London and New York turned negative for the first time in 2025, mainly reflecting expectations of a surplus in the 2025/26 crop. For the 2024/25 cycle, we project a surplus of around 37,000 tons, while for 2025/26 this figure may approach 360,000 tons, supported by better prospects in West Africa and production expansion in origins such as Ecuador. Even so, the global balance between current supply and demand remains tight, which keeps market volatility high and reinforces sensitivity to new weather, trade, and grinding data that can quickly change market sentiment

The cocoa market ended the week with contracts accumulating declines of more than 10% after reaching their lowest level in a year. In the United States, the interest rate cut in September reflects inflationary pressure and the slowdown in the labor market, while in Europe, the ECB kept rates unchanged in an environment of relative stability. In this scenario, funds remain cautious, although recent movements have reflected not only technical factors but also the updating of prices paid to producers in Ghana and Ivory Coast, which stimulated a faster pace of deliveries and put pressure on prices.

Despite the high price environment, total net cocoa imports by the United States increased by almost 70% until July compared to the previous year, with Ecuador standing out, now accounting for 30% of almonds received. Europe, in turn, saw a decline in net imports, influenced by higher acquisition costs.

The technical outlook for the 2025/26 season indicates a possible surplus of around 360,000 tons, but the volume will depend on a balanced water regime in West Africa in the coming months. Even so, the current global balance remains tight, keeping the market sensitive to new data on weather, trade policy, and grinding.