Just caught the cocoa bounce today - May NY up 5.73% and London up 4.76%, hitting 1.5-week highs. Pretty sharp move considering we've been in a downtrend for seven weeks. The price of cocoa rallied hard on geopolitical concerns about the Strait of Hormuz and potential shipping disruptions, which got traders covering short positions.

But here's the thing - the fundamentals are still pretty bearish underneath. The ICCO came out with a massive surplus forecast for 2024/25 (75,000 MT vs 49,000 MT before), first surplus in four years. Global production is climbing 8.4% year-over-year, and warehouse inventories just hit a 6.5-month high. Meanwhile, chocolate makers like Barry Callebaut reported a -22% drop in cocoa division sales volume because consumers are backing away from the high price of cocoa products. European cocoa grindings fell -8.3% in Q4, the worst in 12 years.

So yeah, today's rally looks more like short covering than any real bullish setup. The price of cocoa faces serious headwinds from weak demand and oversupply. Unless something major disrupts shipping, I'd be cautious about this bounce.