Cocoa prices are trading in a narrow range as the market enters 2026, with both ICE Europe and ICE US futures showing mild bearish momentum. The market is taking a breather after a 50% retracement over 2025, with prices expected to remain relatively stable around current levels in the near term.

ICE EU March 2026 futures closed at £4,290 per tonne on January 6th, down 1.1% week-on-week, while ICE US futures settled 1.5% lower at $5,954 per tonne. Both markets are exhibiting mild contango as trading volumes begin to recover following the holiday period.

West African weather and supply developments

Weather reports have remained a bearish influence, with mild Harmattan conditions and some well above average rainfall for this time of the season across major growing regions. Farmers have reported expectations that the current rains will boost February/March supply allowing a strong finish to the main crop, but this remains to be confirmed.

Ivory Coast cocoa arrivals reached 1.071 million metric tonnes by January 4th, placing them just 3% below the volumes achieved at this stage last season. The slower arrivals are not necessarily due to reduced supply but transport restrictions introduced in early December by regulators, designed to smooth the market after a surplus of arrivals in Q4.

Inventory developments

US certified cocoa inventories were reported at 1.631 million 60kg bags at the end of December, 24% higher than at the start of 2025. After starting the year near record lows, European cocoa warehouse stocks increased by 70% over 2025 to close the year at 36,210 tonnes.

Industry cover remains around seven months estimated, around normal levels. Origin selling has reportedly been relatively weak at current levels.

Product pricing trends

Cocoa powder prices were still correcting at the end of 2025, declining 4.1% month-on-month to €6,805 per tonne, while cocoa butter prices followed beans higher to €11,370 per tonne, up 9% month-on-month.

Next week’s grinding data is likely to show continued weakness, with demand only expected to strengthen from mid-2026. Weaker prices may take around six to eight months to feed through to lower priced stocks for processors, and chocolate prices will remain relatively high for consumers in H1.

Market factors and outlook

Cocoa’s Bloomberg Commodity Index re-entry is expected to see around 30,000 to 40,000 lots of buying starting on January 8th, a factor which is preventing more downside on weak fundamentals.

Fund positioning at the end of 2025 remained short, but without increasing much in size. There is little on the short term horizon to break the mildly bearish momentum. After a 50% retracement over 2025, prices are taking a bit of a breather and expected to remain relatively stable around current levels.

Should grindings show an unexpected improvement indicating demand returning sooner than expected, we might see a change in price dynamics. Focus remains on the mild Harmattan and expectations for a strong end to the main crop. From the middle of the month, focus will turn to the development of the April-September mid crop.

2025 was a year of output recovery and demand finally responding to higher prices. 2026 is expected to be a year in which the market tries to find some equilibrium balancing the longer term structural issues preventing major upside in output, and longer term shifts in demand favouring some level of sticky substitution of cocoa for other products.


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