Declining grindings and position adjustments reinforce caution in the cocoa market

Cocoa prices have changed in recent days. The first contract closed the week of October 24 at USD 6,319/t in New York and GBP 4,518/t in London, accumulating weekly gains of 7.19% and 10.03%, respectively. The movement contrasts with that of previous weeks, when prices had fallen.

Part of the most recent fluctuations reflect the release of grinding data for the third quarter of 2025, the main indicator of global demand performance. The Cocoa Association of Asia (CAA) and the European Cocoa Association (ECA) reported a decline in activity during the period in question. In the case of the CAA, the decline was 17.08%, influenced mainly by the significant reduction observed in Malaysia, where the volume processed was 35.1% below that recorded in the same quarter of 2024. Even so, positive results in countries such as Indonesia and Singapore helped to soften the regional decline.

In Europe, the drop in processed volume was slightly less than the market had expected, a scenario we had already considered. The deficit in total net cocoa imports from January to September compared to the same period last year has been gradually decreasing, from over 10% at times to around 3.99% currently, indicating a slight recovery in activity throughout the year.

The National Confectioners Association (NCA), in turn, presented positive results, with an increase of 3.22% compared to the same period last year. The advance was partially explained by the inclusion of new participants in the survey, but it also reflected the significant increase in total net cocoa imports, which until July were almost 70% above the same period in 2024.

Despite the mixed results, the impact of high prices on consumption remains evident. Despite downward corrections in prices, some of which occurred more intensely later on and were not sufficient to alleviate costs during the quarter, pressure on the sector's margins remained. Thus, the results still reflect a scenario of historically high prices and squeezed margins in the industry. After the release of the figures, which reinforced expectations of a surplus for the current cycle, the market closed the week of October 17 at USD 5,895/t in New York and GBP 4,106/t in London. Prices remained under pressure in the oversold zone, increasing the probability of technical correction movements.

In this sense, the following week, which ended on October 24, showed a different behavior. Prices rose again in both markets, in a technical movement sustained by the reduction in Ivory Coast cocoa arrivals and discussions about the expected entry into force of the European Union's Anti-Deforestation Regulation (EUDR).

According to the recent Cocoa Barometer report, about 40% of cocoa beans from Ivory Coast were traceable last season. This data reinforces the attention of the European market, which depends significantly on African sources for supply. As a result, there is growing expectation for possible adjustments to the EUDR requirements and greater clarity about their effects on global trade chains.

On Friday, October 24, the upward trend lost momentum, and prices fell slightly in both markets. According to the latest data from ICE Futures Europe, speculators increased their net short positions by 2,552 lots through October 21, totaling 15,609 lots. The increase in short positions reinforces the more cautious sentiment and bearish bias of funds toward the London market. In New York, data remains unavailable due to the temporary shutdown of the U.S. government.

The market remains attentive to the release of financial results from major chocolate processors and manufacturers in the coming weeks. These balance sheets should help set the tone for the market in the short term and are likely to keep volatility high as fundamentals continue to adjust at the start of the new 2025/26 crop year.

Cocoa prices have been highly volatile in recent weeks. After consecutive declines, prices rose again in the week ending October 24, with the first contract closing at USD 6,319/t in New York and GBP 4,518/t in London, accumulating gains of 7.19% and 10.03%, respectively. The movement was sustained by the reduction in Ivory Coast cocoa arrivals and the progress of discussions on the European Union's Anti-Deforestation Regulation (EUDR), but remained more technical in nature.

The grinding results for the third quarter of 2025 reinforced the picture of more subdued demand. The CAA and ECA reported declines in activity, while the NCA showed slight growth, supported by an increase in net cocoa imports. Despite the mixed results, the data still reflects the impact of historically high prices on consumption and industry margins. The increase in net short positions sold by funds in London confirms the more cautious tone of the market, which is now turning its attention to the financial results of the main processors and chocolate manufacturers.