Facts
- Cocoa futures on ICE (COCOA) fell from around $12,860 in the second half of December 2024 to about $7,400 per ton as of September 5, 2025.
- The latest Commitment of Traders (CFTC) report (August 26) shows that large speculators (Managed Money) increased their short positions, while producers (Commercials) tied to the physical market continue to hold substantial short exposure in cocoa.
- Mondelez, at a Barclays conference, indicated that it expects a gradual improvement in supply from West Africa, with high cocoa prices “motivating” farmers to invest.
- After a weak 2023/2024 season, pod counts in West Africa have recently rebounded to 7% above the 5-year average.
Recommendation
- Short position in COCOA at market price.
- Take profit: 6,550
- Stop loss: 8,400
Opinion
The cocoa market has entered a “correction phase” of the entire bull run that began back in 2023. According to the latest CFTC data, large speculative funds (Managed Money) are positioning more aggressively for a further price pullback.
Historically elevated prices are expected to support a gradual improvement in supply on African plantations—provided weather conditions do not deteriorate dramatically. Commercials must plan hedges many months in advance due to production cycles (e.g., cocoa harvests) and have first-hand insights into physical market dynamics. Although they slightly reduced their short exposure in the latest report, they still maintain a significant net short position, moving in tandem with Managed Money.
A further bearish factor is weak demand, as highlighted by comments and results from companies like Barry Callebaut, Lindt, and Mondelez. High cocoa prices continue to weigh on sales, while bean processing is declining.
Source: xStation5
