Cocoa futures (COCOA) are extending their downward trend, falling nearly 5%, and are currently testing the area around the 200-day exponential moving average (EMA200, red line). The market is under pressure due to heavy rainfall in West Africa, which has raised hopes for a smaller-than-expected supply deficit this year and may lead to improved forecasts for both the quality and quantity of the upcoming harvests.
Cocoa inventories in ICE warehouses totaled over 2.187 million bags as of Tuesday, May 27, marking an 8-month high.
Since reaching a 21-year low in January 2025 (1.263 million bags), inventories have increased by nearly 80%, further adding to the downward pressure on cocoa prices.
On the other hand, despite the forecasted rainfall in West Africa (expected to continue through the end of the week), around 75% of Ivory Coast and Ghana is still battling drought conditions, according to data from the African Flood and Drought Monitor.
COCOA (Daily Interval – D1)
The contract is testing the lower boundary of the upward price channel and a key support level represented by the 200-day EMA. A drop below 9,000 points could increase the likelihood of further selloffs toward $8,000 per metric ton.
Source: xStation5
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