US Cocoa Futures - Dec 26 (CCZ6)

Investing.com -- US Cocoa Futures plunged 5.4% today, retreating sharply from a session high of 6,235 to a low of 5,841, as a wave of profit-taking collided with fresh evidence of a deepening near-term supply glut. Cocoa futures had already been hovering below the $6,200 level on signs of improving supplies, with the latest data showing Ivory Coast farmers shipped 2.14 MMT of cocoa to ports through August 30 — a 19% increase over the same period a year earlier. That volume surge, arriving just as the market had rallied close to its 52-week high of 7,644, made the price level difficult to defend.

ICE inventories climbed to a two-year high of 3,411,776 bags as of September 1, a critical data point that signaled physical demand is not absorbing available supply at the pace bulls had hoped. The Ivory Coast also announced plans to boost its domestic processing capacity to 1.3 MMT in 2026/27 from 650,000 MT, a structural expansion that further reinforced the bearish supply narrative and prompted commodity trading advisors to add to short positions.

While some market participants, including Malaysian processor Guan Chong's chief executive, projected a global cocoa deficit of between 300,000 and 400,000 tonnes in 2026/27 — citing excessive rainfall, waterlogged farms, and disease pressure in West Africa alongside the possibility of an intensifying El Niño Harmattan — Hedgepoint countered with a forecast of only a 111,000-tonne surplus for 2026/27, leaving the market deeply divided on the forward balance. That uncertainty was enough to shake out speculative longs who had built positions on the supply-risk narrative. Broader risk sentiment also turned decisively negative today, with US equities under broad pressure, reinforcing a firmer US Dollar that mechanically weighs on dollar-denominated soft commodities like cocoa.

The net result was a session where every bearish lever was pulled simultaneously: record-high certified stocks, a record-pace Ivory Coast shipping season, a risk-off macro backdrop, and conflicting forward supply forecasts that eroded conviction among bulls. Concerns over West African cocoa supply did persist, as heavy rainfall and high humidity increased disease risks and weakened pod development, while a strong El Niño could delay rains and extend dry spells across major producers — but these medium-term risks were insufficient to arrest today's sharp correction, with the market firmly pricing near-term abundance over longer-dated weather fears.