Short covering ahead of grindings data

The rally appears linked to short covering by funds ahead of major global grinding updates, potentially on speculation that demand data could show an earlier-than-expected recovery. The US-Iran ceasefire announcement also supported commodity prices broadly, easing near-term concerns about economic drag, though analysts note important caveats around energy infrastructure damage and rising inflation.

The most active July 2026 contract saw fundamental buying above the 2,500 level. Some market participants suggest this could indicate a shift in the price floor, though the outlook remains uncertain.

Supply picture stays well-stocked near term

West African weather has been characterised as positive for the developing midcrop, expected between May and July. Bloomberg reported that Ivory Coast’s regulator, Le Conseil du Café-Cacao, has sold around 800,000 tonnes of beans for the 2026/27 main crop, accelerated from an earlier estimate of 350,000 tonnes. The accelerated forward selling is seen as having helped limit the extent of the price gains.

Ivory Coast port arrivals reached 1.462 million tonnes by April 12, edging slightly above volumes at the same point last season.

Demand a continuing bearish influence

Malaysian Q1 grindings rose 8.7% year-on-year to 91,496 tonnes, a positive signal for a key processing market. However, European grindings data, due shortly, is widely expected to show a decline, with the market divided on the scale. US chocolate candy sales fell 1.3% year-on-year in the 13 weeks to March 22, according to Circana. Consumption is expected to remain a bearish influence, potentially through the second half of the year.

Funds hold a combined net short of -47,986 lots across EU and US markets, the largest such position in years.

El Niño beginning to enter the narrative

The US Climate Prediction Centre places a 61% probability on El Niño emerging between May and June 2026, persisting through year-end. The risk is entering market commentary but has not yet had a meaningful price impact. It may become a greater focus once grindings data has been digested.

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