Cocoa futures extended their decline this week, sliding below $5,300 per metric ton on the ICE exchange – the first break of that level since late 2024. The drop reflects shifting market expectations around U.S. tariff policy and improving production trends in key West African growing regions.
The move marks a sharp contrast to the extreme volatility seen earlier this year, when weather disruptions and supply fears pushed cocoa into record territory. Now, traders are pricing in a more balanced outlook as both policy signals and crop conditions turn more favorable.
Why Cocoa Futures Are Falling Below $5,300
A major driver behind the price decline is growing anticipation of U.S. tariff cuts, which would reduce import costs and help stabilize supply chains. Even without formal confirmation, the prospect alone has been enough to trigger selling across commodity desks, as markets unwind risk premiums tied to prior shortages.
Meanwhile, updated data from Ivory Coast – the world’s largest cocoa producer – show crop arrivals trending about 7% above the five-year seasonal average. Improved rainfall and fewer logistics disruptions have supported steady harvesting, tempering earlier concerns about structural supply deficits.
Traders note that the combination of potential tariff relief and stronger West African harvests has pushed futures lower across both the New York and London markets, leading to the decisive break below the $5,300 threshold.
What Traders Should Watch Next
The next phase for cocoa pricing hinges on two key variables: U.S. trade policy and West African weather patterns.
A formal announcement of tariff reductions would likely exert additional downward pressure by lowering import costs and reinforcing expectations of healthier supply. But any renewed climate disruption – particularly excess rainfall or crop disease – could quickly tighten conditions again and force prices higher.
For now, cocoa markets are transitioning from an acute supply scare to a more policy-driven environment, with futures traders watching closely whether the $5,300 level becomes a new floor or another short-term waypoint.
