U.S. Cocoa Futures Surge More Than 11% as Short Covering Accelerates
U.S. cocoa futures jumped more than 11% during Monday morning trading, with prices reaching an intraday high of 4,709.5 before easing slightly to trade near 4,646.5.
The sharp rally was largely driven by a decline in the U.S. Dollar Index, which triggered aggressive technical short covering across the cocoa futures market.
Because cocoa is priced in U.S. dollars, a weaker dollar makes the commodity cheaper for international buyers, increasing demand and making futures contracts more attractive to traders outside the United States.
Massive Bearish Positions Fuel Violent Cocoa Rally
The latest Commitment of Traders (COT) report revealed that hedge funds and speculative traders significantly increased bearish positions in New York cocoa futures.
During the week ending April 28, funds added 3,499 new net-short positions, bringing total bearish positions to 19,885 contracts — the highest level seen in more than three years.
Such extreme bearish positioning created the conditions for a powerful short-covering rally. When too many traders are positioned on one side of the market, even a relatively small catalyst, such as a weaker dollar, can trigger rapid buying as short sellers rush to close their positions.
Supply Concerns Add Further Support to Cocoa Prices
Beyond technical factors, the global cocoa supply outlook has also become more supportive for prices.
Commodity firm StoneX recently reduced its forecast for the 2026/27 global cocoa surplus to 149,000 metric tons, down sharply from its previous estimate of 267,000 metric tons issued in January.
The company cited growing risks to West African cocoa production due to a potential El Niño weather event, which could negatively impact crop yields in key producing regions.
At the same time, reports from Reuters indicated that Ghana’s state-owned cocoa buyer, Produce Buying Company, is facing severe financial difficulties after accumulating large debts.
Some cocoa farmers in Ghana have reportedly remained unpaid since November, increasing fears of supply chain disruptions in one of the world’s largest cocoa-producing nations.
Strait of Hormuz Disruptions Push Commodity Costs Higher
The ongoing closure of the Strait of Hormuz has also contributed to higher cocoa prices by disrupting global shipping and commodity supply chains.
The geopolitical tensions have increased fertilizer costs, shipping expenses, fuel prices, and insurance premiums, all of which raise costs for cocoa importers and global food manufacturers.
These broader inflationary pressures continue to support commodity prices across several agricultural markets.
Chocolate Demand Remains Surprisingly Strong
Despite elevated cocoa prices and broader economic uncertainty, consumer demand for chocolate products has remained relatively resilient.
Positive earnings results from major chocolate producers, including Mondelez International, have helped reassure investors that end-user demand remains healthy.
Meanwhile, the broader U.S. stock market also provided a supportive backdrop for risk assets, with the S&P 500 rising 0.24% and the NASDAQ Composite gaining 0.11% during the session.
Cocoa Market Remains Vulnerable to Volatility
Despite today’s rally, U.S. cocoa futures remain down roughly 50% over the past 12 months, leaving the market deeply oversold from a longer-term perspective.
The combination of a weakening U.S. dollar, record speculative short positions, deteriorating crop outlooks in West Africa, and ongoing geopolitical disruptions created the ideal conditions for today’s explosive move higher.
Analysts suggest the rally reflects not only shifting supply expectations but also the unwinding of heavily crowded bearish trades across the cocoa market.
