Global Cocoa Prices Tumble as Market Volatility Intensifies; Coffee Also Declines

Global cocoa prices fell sharply on Monday as speculative trading and tighter exchange margin requirements triggered renewed market volatility. Coffee prices also declined, although analysts expect cocoa’s long-term outlook to remain supported by tightening global supplies.

Global cocoa prices suffered steep losses on Monday as heightened market volatility continued to unsettle commodity traders, while coffee prices also retreated following dramatic price swings over the past week.

On the Intercontinental Exchange (ICE), London cocoa futures fell by more than 9% during intraday trading to £4,083 per metric tonne, after already declining 6.4% in the previous session. In New York, cocoa futures also dropped by more than 9%, trading at US$5,511 per tonne.

The sharp correction follows an extraordinary week in which cocoa prices had surged by around 20%, driven largely by speculative buying amid growing concerns over global supply.

Market analysts attributed much of the recent volatility to increased speculative activity, as investors sought opportunities in agricultural commodities amid heightened uncertainty across global financial markets.

Concerns that the El Niño weather phenomenon could intensify later this year encouraged speculative buying in both cocoa and coffee markets, with traders anticipating adverse weather conditions that could reduce crop yields in key producing regions.

To manage the risks associated with the rapid price increases, ICE repeatedly raised trading margin requirements during the week. The higher capital requirements reduced market liquidity by limiting the number of participants able to trade, contributing to even larger price fluctuations.

Dealers also noted growing participation by short-term speculative traders—often referred to as “cocoa tourists“—who typically follow technical trading signals rather than underlying market fundamentals.

Despite the latest decline, analysts believe cocoa prices could remain well supported over the medium term due to tightening global supplies.

The 2026/27 cocoa harvest in Côte d’Ivoire, the world’s largest cocoa producer, is expected to decline by more than 10% as insufficient farm maintenance and excessive rainfall linked to El Niño increase the risk of crop diseases.

Technical indicators also suggest that the recent decline may represent a temporary market correction rather than the beginning of a prolonged downturn.

Coffee markets experienced similar volatility.

ICE Arabica coffee futures fell 2.2% to US$3.2680 per pound, following dramatic price movements throughout the previous week, including a 16% surge on Monday before reversing sharply over subsequent trading sessions.

Robusta coffee futures also declined, falling 2.3% to US$3,791 per tonne.

Meanwhile, the U.S. Climate Prediction Center forecasts an 81% probability of a very strong El Niño developing between October and December, potentially making it one of the strongest such events on record. This outlook continues to underpin concerns over agricultural production across major commodity-exporting regions.

Elsewhere in soft commodities, raw sugar prices eased 0.6% to 14.80 cents per pound, while white sugar declined 1.4% to US$460.50 per tonne.

The sharp swings in cocoa prices are particularly significant for Africa, which accounts for the majority of global cocoa production. Countries such as Côte d’Ivoire, Ghana, Nigeria and Cameroon rely heavily on cocoa exports for foreign exchange earnings and rural livelihoods. While higher prices can increase export revenues, prolonged market volatility creates uncertainty for producers, exporters, processors and manufacturers. The evolving El Niño weather outlook also reinforces the growing importance of climate resilience and sustainable agricultural investment across Africa’s cocoa sector.

Source: Reuters

Reporting: May Angel.

Editing: Shailesh Kuber.