Jan 9 / Carolina França

New Year, Persistent Challenges: Cocoa Market Starts 2026 Volatile

Above-average rainfall in West Africa may improve conditions for the end of the main crop and the start of the 2025/26 mid-crop, in contrast to what was observed in the same period last season.
The market is closely monitoring the release of fourth-quarter 2025 grinding results to assess the possible impacts of price corrections observed during the period.
On a technical side, the inclusion of New York cocoa in the Bloomberg Commodity Index may provide short-term support for prices. However, the market has already anticipated part of this movement.
The speculative funds positioning remains almost stable and below the historical average, reflecting both the caution of participants and the lower activity typical of the year-end holiday period.

Cocoa futures ended the first week of 2026 trading at 5,345 USD/t in New York and 3,916 GBP/t in London, accumulating weekly losses of 8.96% and 7.81%, respectively, reversing the gains of the previous session. With no significant changes in fundamentals, the main drivers of recent movements remain associated with weather and technical factors.

In the cocoa-producing zone of West Africa, the main region of origin for cocoa beans, above-average rainfall has been recorded in recent days in relevant areas of Ivory Coast and Ghana. This pattern contrasts with that observed in the same period last season, when these regions faced drier conditions.

If this scenario continues, it reinforces a more positive outlook for the end of the main crop and the beginning of the 2025/26 mid-crop, contributing to the maintenance of the surplus expectation in the current cycle. Still, the current scenario reflects, to a greater extent, the decline observed in cocoa grinding, the main indicator of demand, rather than a significant increase in supply. In this context, the market awaits the release of the fourth quarter 2025 grinding results next week, when more intense price corrections were observed, to assess the possible impact of these movements on grinding volumes.

On the technical side, the inclusion of New York cocoa in the Bloomberg Commodity Index emerges as factor that may support prices in the short term, although it is important to note that part of the market is already positioned for this movement. The change may generate a significant trading volume, as funds linked to the index rebalance their portfolios.

In this context, technical movements associated with these flows may favor occasional price fluctuations, and in trading on January 8, the market recorded gains of 2.99% in New York and 2.60% in London. In the January 9 session, prices fell, giving back previous gains amid increased sales as prices approached more attractive levels. In addition, the movement may also be associated with the exit of speculative investors who had anticipated the inclusion of the contract in the index last year, without any significant change in fundamentals.

In general, the market continues to await new information related to fundamentals. In this sense, speculative funds remained almost stable in New York according to the latest report released on January 5, at levels still below the average and the same period corresponding to the previous year, a scenario that reflects both the caution of participants and the reduction in activity observed during the year-end holiday period.

Cocoa futures ended the first week of 2026 with a recovery after corrections observed at the beginning of the period, in an environment still marked by high volatility. In the absence of relevant changes in fundamentals, recent market movements continue to be influenced by climatic and technical factors, while agents continue to wait for new updates that bring greater clarity on the global balance trend.

In West Africa, the main producing region, the above-average rainfall recently observed in relevant areas contrasts with the drier pattern recorded in the same period of the previous season and reinforces a more favorable outlook for the end of the main crop and the beginning of the 2025/26 mid-crop, if the scenario remains unchanged. At the same time, technical factors continue to influence short-term dynamics, with the market attentive to flows related to index rebalancing and the release of fourth-quarter 2025 grinding data to assess the impacts of price corrections observed throughout the period.

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New Year, Persistent Challenges: Cocoa Market Starts 2026 Volatile

New Year, Persistent Challenges: Cocoa Market Starts 2026 Volatile

Weighted cumulative rainfall by Ivory Coast producing districts (mm)

Weighted cumulative rainfall by Ghana producing regions (mm)

Cocoa prices 1st contract

CFTC: Net speculative position (lots)

In Summary

Weekly Report — Cocoa

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