FX.co ★ Cocoa Futures Set for Sharp Yearly Drop

Cocoa futures have declined to below $5,900 per tonne, retreating from a recent peak of $6,242 observed on December 29. This previous high was primarily influenced by technical factors and reports of slowed port arrivals from Ivory Coast, the leading cocoa producer. Notably, the market's attention is also on cocoa's re-entry into the Bloomberg Commodity Index starting January 2026, marking its return after a two-decade absence. Prices are projected to fall by more than 50% this year, largely due to anticipated improvements in global supply, bolstered by favorable weather conditions in West Africa, particularly in Ivory Coast. This forecast comes even amidst recent downward revisions by Citigroup and Rabobank regarding the global surplus, suggesting a tighter supply than previously thought. Currently, major chocolate producers like Hershey, Mondelez, and Barry Callebaut are experiencing a decline in chocolate demand. Looking forward, the year 2026 may bring more stability, supported by recovering plantations in Ivory Coast and Ghana, along with improved global stock levels.