Cocoa Futures Stabilize After Steep Sell-Off, Bearish Tone Lingers

Short-term bounce emerges from technical support but bearish sentiment dominates amid rising Ghanaian output and inventory recovery.

Ghana's Upward Forecast Triggers Sell-Off

Cocoa July futures (CCN2025) began the week with heightened volatility, retreating sharply after Ghana’s Cocoa Board raised its 2025/26 production estimate by 8.3 percent to 650,000 metric tonnes. The revision, up from 600,000 tonnes in the prior season, helped cement a bearish midweek tone, especially as the news coincided with a rise in US-monitored inventories to a 9¾-month high of 2.36 million bags

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Demand Signals Weaken, Tariff Risks Loom

Grind data for Q1 2025 reinforced the downside pressure. North America, Europe, and Asia all reported year-on-year declines of 2.5 to 3.7 percent. Major manufacturers including Hershey and Mondelez flagged sales softness and warned of second-quarter margin headwinds from cocoa tariffs, adding to demand-side concerns.

Technical Rebound Faces Resistance

July cocoa futures rebounded from support at $8,535 following a sharp pullback from record highs. The short-term rally, however, stalled at $9,326, a key resistance level that has capped gains so far. Price action remains bounded between converging 50- and 100-period SMAs, keeping momentum indecisive. A break above $9,326 could re-test the $10,531 level, but failure may open a path back to $8,023 or lower.

Short-Term Risks Tilted to Downside Despite Weather Concerns

While mid-crop delays in Ivory Coast and export drops from Nigeria offer potential support, these are outweighed for now by improving West African production prospects and replenished inventories. Sentiment remains cautiously bearish, with traders watching closely for fresh grind data and harvest updates.

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