Cocoa spent the week revolving around one number: Q2 grinding data, the demand signal traders had been waiting on since July’s rally began. When it landed, it settled almost nothing.
Global grindings rose 9.95% year on year to 811,671 tonnes, confirming that record prices have not yet broken demand. The regional split was wide. Asia jumped 25% and Ivory Coast processing rose nearly 29%, while Europe fell 4.6%, the clear laggard even though Germany’s reported figure actually edged up. North American grind rose 7.65%. Taken together, the read is that demand is holding, but price sensitivity is starting to bite in some markets before others.
The price reaction was the surprising part. Rather than rallying on data that broadly backed the deficit case, both London and New York September contracts fell close to 9% on the day, the first time in the recent run that a late rally failed to cushion the drop. ICE London front-month eased 2% over the week to 4,173 GBP/t, while ICE New York was slightly firmer at 5,607 USD/t, up 37% over the month. With ten-day realised volatility above 90%, the market’s response to fundamentals is proving as jumpy as the data.
Positioning is turning more constructive underneath the noise. Funds kept trimming their New York net short, and in Europe flipped to a small net long. Citi closed its long this week and moved to neutral on New York futures, having caught most of the June move, while keeping three and twelve month targets of $5,000 and $6,000 a tonne pending clearer evidence of crop damage and firmer demand.
Supply risk is the slow burn support. Ivory Coast arrivals are running about 19% ahead of last season, which the market largely shrugged off as last year’s business. Attention is on the weather: season to date rainfall across West Africa has been above average, but July has turned notably drier, and forecasters keep raising the odds of a strong El Niño intensifying the Harmattan into early 2027, a threat to the tail of the main crop and the mid crop that follows.
With rallies proving short lived and volatility this high, sharp two way moves look like the base case until a durable trend emerges.
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