Cocoa: The Short Is Growing as West Africa Dries

Cocoa's bearish case has become easier to defend: global supply returned to modest surplus, inventories have rebuilt and demand weakened under record prices. Funds have responded by moving deeper net short. But Côte d'Ivoire is drying out and Ghana has widened its farmgate-price advantage just as that bearish position grows.

TL;DR

December New York cocoa closed Friday at $5,619 per tonne, recovering from a $5,111 intraday low on 22 September but remaining roughly 15% below its 28 August close.
December London closed at £4,205 per tonne, after touching £3,799 on 22 September.
Managed money moved from −9,539 to −16,406 net short in the week to 22 September, liquidating 5,145 longs while adding 1,722 shorts.
ICCO estimates 2024/25 world production at 4.723 million tonnes, up 8.4%, against grindings of 4.628 million tonnes and a 37,000-tonne surplus.
End-season stocks are estimated at 1.320 million tonnes, equivalent to roughly 28.5% of annual grindings.
ICCO has withheld production and grinding forecasts for 2025/26, meaning another surplus is not yet established.
Ghana raised its 2026/27 producer price to GH¢42,400 per tonne, around $3,647, while Côte d'Ivoire remains at CFA1,200/kg, roughly $2,084 per tonne — a gap of approximately 75%.
That differential has widened despite Ghana and Côte d'Ivoire agreeing in June to work towards harmonising farmgate prices in dollar terms.
Below-average rainfall in Côte d'Ivoire is meanwhile affecting small-pod development, creating an emerging supply risk just as speculative positioning becomes more bearish.

Price: The Sell-Off Meets Its First Test

December New York cocoa closed at $5,923 per tonne on 15 September before falling to $5,327 by the 18th and reaching an intraday low of $5,111 on 22 September. It then recovered across the remainder of the week to close Friday at $5,619. London followed a similar pattern, with December cocoa touching £3,799 on 22 September before recovering to £4,205 by Friday.

The rebound has not reversed the broader decline. New York closed at $6,648 on 28 August, leaving the contract roughly 15% lower by 25 September, while London fell from £4,773 to £4,205 over the same period, a decline of almost 12%.

West African weather concerns contributed to the recovery from the 22 September lows, but Friday also brought Ghana's new producer-price announcement. It would therefore be too clean to attribute the entire four-session rebound to weather alone. The important point is that the market found support as several West African supply variables returned to focus.

Funds Move Deeper Short

The CFTC report for positions held on 22 September shows managed money at 17,515 longs and 33,921 shorts, leaving a net short of −16,406 contracts. That compares with −9,539 a week earlier, and the 6,867-contract deterioration came from both sides of the book: funds liquidated 5,145 longs while simultaneously adding 1,722 shorts.

This is more bearish than simple profit-taking. Investors are reducing exposure to higher prices while actively increasing exposure to lower ones. The physical evidence explains why: cocoa has moved a considerable distance from the scarcity conditions that drove the previous price crisis.

The Bear Case Has Physical Support

The International Cocoa Organization's August bulletin estimates 2024/25 world production at 4.723 million tonnes, up 8.4% year on year. Grindings are estimated at 4.628 million tonnes, leaving an estimated 37,000-tonne global surplus. End-of-season stocks are estimated at 1.320 million tonnes, equivalent to roughly 28.5% of annual grindings.

The adjustment has occurred on both sides of the balance sheet. Production recovered while exceptionally high prices weakened processing demand, so the market rebalanced not simply because more cocoa was produced, but because less was ground. Visible inventories reinforce the change, with ICE-monitored US cocoa inventories reaching around 3.43 million bags during September, materially improving the physical buffer compared with the acute scarcity phase.

The bearish fund position therefore has a genuine fundamental foundation. Cocoa is no longer trading against a completed-season balance defined by severe deficit.

But the Next Surplus Is Not Yet Established

The distinction between the balance that has just repaired and the one futures are now pricing is important. ICCO has withheld production and grindings estimates for 2025/26 while its forecasting methodology is under review, and the 37,000-tonne 2024/25 surplus is small relative to annual production above 4.7 million tonnes. Stocks have recovered, but the market has not accumulated an enormous cushion.

Funds can reasonably price the end of the previous scarcity regime. There is less hard evidence for assuming that the current season will produce another meaningful surplus.

Côte d'Ivoire: The Weather Turns

That uncertainty matters because conditions in the world's largest producer deteriorated during September. Reuters reported on 21 September that rainfall was below average across most major Côte d'Ivoire cocoa regions. Soubre and Divo recorded no rain during the reporting week, while Daloa received only 3.6mm, 26.1mm below its average.

Farmers reported small pods falling from trees because of insufficient moisture. Some of those pods are intended for harvesting next year, meaning persistent dryness could affect supply beyond immediate bean quality. Farmers also warned that without a return of regular rain before mid-October, the main-crop harvest could finish unusually early, potentially in December.

This is not evidence of a crop failure. The distinction is between observed weather deterioration and realised production loss: the first is visible, the second is not yet established. But that uncertainty is arriving while managed money is already −16,406 contracts net short.

Ghana Raises the Farmgate Stakes

Ghana introduced another supply complication on 25 September by setting its 2026/27 producer price at GH¢42,400 per tonne, equivalent to roughly $3,647 per tonne at the exchange rate used in the announcement. Côte d'Ivoire's producer price remains CFA1,200 per kilogram, or around $2,084 per tonne. On those figures, Ghana is offering farmers approximately 75% more in dollar terms.

That is wider than the roughly 67% differential identified in Bloodstone's 14 September cocoa analysis, and it is particularly notable because Ghana and Côte d'Ivoire agreed in June to work towards harmonising their farmgate prices in US-dollar terms.

The difference matters because price disparities across neighbouring producing countries create incentives for beans to move towards the higher-paying market. Ghana's 2025/26 deliveries exceeded 750,000 tonnes against a 650,000-tonne target, with the stronger figure reportedly supported in part by inflows from neighbouring countries. The widening producer-price gap therefore complicates interpretation of national crop statistics: higher Ghanaian deliveries do not necessarily translate one-for-one into greater Ghanaian production if cross-border flows are material. That makes the price decision more than a farmer-income story, because it potentially affects where West African cocoa is marketed and how reliably country-level arrivals represent underlying production.

The farmgate decision arrives alongside a new financing structure. COCOBOD's Cocoa Capital has launched a GH¢16.3 billion Domestic Cocoa Notes Programme, including GH¢14 billion of short-term funding intended to support 2026/27 cocoa purchases and GH¢2.3 billion of longer-dated issuance for legacy debt refinancing. The programme matters principally because the higher producer price must be financed effectively through the purchasing system, so it is best treated as infrastructure supporting the new pricing regime rather than as an independent directional signal for cocoa futures.

Demand Has Been Damaged, Not Eliminated

The other pillar of the bearish case is demand. ICCO's lower 2024/25 grinding estimate confirms that exceptional prices weakened processing activity and helped rebalance the global market. But lower bean prices can eventually reverse part of that adjustment by improving processor economics and allowing manufacturers to rebuild volumes.

That makes the next quarterly grinding data important. European and Asian third-quarter grind statistics are due on 15 October. If grindings remain weak despite cocoa's substantial price decline, the bearish thesis gains another pillar. If processing begins recovering materially, some of the demand destruction that helped restore the latest surplus begins to reverse.

Outlook

Cocoa has moved into a more balanced regime. The severe deficit has been replaced by a modest surplus, inventories have recovered and high prices damaged demand. Those changes justify both the decline from late-August prices and managed money's move deeper net short.

The uncertainty lies in extrapolating that adjustment into 2025/26. ICCO has not yet published a current-season production and grinding balance. Côte d'Ivoire weather has deteriorated, while Ghana's sharply higher producer price creates a renewed incentive for cross-border bean flows just as the new crop begins.

The next question is therefore not whether the previous scarcity premium should have fallen. It is whether the physical improvement is large enough to justify an increasingly bearish position through the next West African crop cycle.

Key Risks

Persistent West African dryness. If Côte d'Ivoire's below-average rainfall extends through October and translates into measurable pod losses, current supply expectations could deteriorate quickly.

Demand remains weaker for longer. If October grindings show little recovery despite lower cocoa prices, the demand destruction that helped create the 2024/25 surplus may prove more persistent.

Cross-border flows distort supply signals. Ghana's roughly 75% producer-price premium over Côte d'Ivoire increases the incentive for beans to move between countries, potentially making national arrivals a less reliable measure of underlying production.

The current-season balance is unpublished. ICCO has withheld 2025/26 production and grindings estimates, so the surplus funds are pricing rests on a completed season rather than the one now under way.

Positioning amplifies volatility. Managed money is already −16,406 contracts net short. Further bearish evidence could extend the position, but an adverse supply surprise would confront a market carrying materially greater speculative short exposure.

Intelligence Monitoring Points

Côte d'Ivoire rainfall through early and mid-October.
Main-crop arrivals and evidence of premature pod loss.
Ghana–Côte d'Ivoire farmgate-price policy and cross-border flows.
ICE-monitored cocoa inventories, last around 3.43 million bags.
Managed-money positioning beyond the current −16,406 net short.
European and Asian Q3 grindings on 15 October.
ICCO's first 2025/26 production and grinding estimates.
Ghana Cocoa Capital issuance and liquidity available for crop purchases.

FAQ

What is cocoa trading at? December New York cocoa closed at $5,619 per tonne on 25 September, while December London closed at £4,205 per tonne.

Why have cocoa prices fallen? Supply recovered in 2024/25, inventories rebuilt and exceptionally high prices weakened processing demand.

Are funds bearish cocoa? Managed money was −16,406 contracts net short on 22 September, compared with −9,539 a week earlier. Funds both liquidated longs and added shorts.

Is cocoa still in deficit? ICCO estimates a 37,000-tonne surplus for 2024/25. It has withheld production and grindings estimates for 2025/26, so another surplus is not yet established.

Why does Ghana's producer price matter? Ghana is now paying roughly 75% more per tonne than Côte d'Ivoire in dollar terms. Such a large differential can encourage cross-border bean flows and complicate interpretation of national deliveries.

What is the next major data point? European and Asian third-quarter cocoa grindings are due on 15 October, providing an important test of whether demand is recovering as prices fall.

Data and source note: CFTC positioning refers to Disaggregated Commitments of Traders, Futures Only, managed-money positions as of 22 September 2026. Price data use the latest completed session available at the time of writing, 25 September 2026, for the December New York and London contracts. ICCO supply-and-demand figures use the August 2026 Quarterly Bulletin and relate to the 2024/25 cocoa balance; ICCO has temporarily withheld production and grindings estimates for 2025/26. Dollar equivalents for the Ghanaian and Ivorian producer prices depend on the exchange rates applied and should be treated as approximate.

Sources

This document is published by Bloodstone Research for informational and institutional research purposes only. It does not constitute investment advice, an investment recommendation, an offer or solicitation to buy or sell any financial instrument, commodity or security, or a forecast of future performance. Market conditions and data may change without notice. Readers should conduct their own analysis and, where appropriate, seek independent professional advice before making investment decisions. For institutional enquiries contact research@bloodstonecapital.co.uk.

Cocoa analysis — 2026-09-28