Just caught cocoa making a decent bounce today - NY May contract up 1.53% and London tracking similarly. Dollar weakness is definitely triggering some short covering, which makes sense given how beat down this market has been lately. The anxiety around cocoa supply has been real, but today's moves suggest traders are at least taking some profits on short positions.

The fundamentals are pretty heavy though. ICCO just raised their global surplus estimate to 75,000 MT for 2024/25, marking the first surplus in four years, and they're forecasting production climbing 8.4% year-over-year. Meanwhile, demand is struggling - Barry Callebaut reported a brutal 22% volume decline in their cocoa division, and European grindings fell 8.3% last quarter. The big chocolate makers are clearly feeling the pressure from consumers balking at these prices.

On the supply side, things keep getting worse. Ivory Coast cut farmer payments by 57% starting March, Ghana already cut theirs by 30%, and both regions are reporting bigger, healthier pods for the mid-crop. ICE inventories just hit a 6.5-month high at 2.2 million bags. Even with shipping cost anxiety from the Middle East situation providing some support, the quotes keep suggesting oversupply will persist. Rabobank recently trimmed their 2025/26 surplus estimate to 250,000 MT, but that's still a lot of cocoa looking for buyers. Hard to get bullish when production outlooks keep climbing and demand keeps disappointing.