Just caught that cocoa price spike on Friday - NY contracts up 5.73% and London up 4.99%. Pretty interesting move considering where we've been the last few weeks. Looks like the Iran situation spooked traders into covering shorts, with concerns about the Strait of Hormuz potentially disrupting shipping routes and jacking up costs. That's a legitimate supply chain worry.

But here's the thing - I've been watching the fundamentals and they're pretty bearish underneath this rally. The ICCO just raised their 2024/25 surplus forecast to 75,000 MT, and Rabobank is projecting another 250,000 MT surplus for next season. Global cocoa production is climbing 8.4% year-over-year. Meanwhile, demand is clearly struggling - Barry Callebaut reported a 22% drop in cocoa sales volume, and European grindings fell 8.3% last quarter, the worst Q4 in 12 years.

What's really weighing on cocoa price momentum is that buyers are just refusing to pay the farm-gate prices Ivory Coast and Ghana are asking for. Both countries slashed farmer payouts recently - Ghana by 30%, Ivory Coast by 57% - yet supplies keep building. ICE inventories hit a 6.5-month high. Meanwhile, Nigeria shipped 17% more cocoa year-over-year in December, adding more pressure.

The rally might hold short-term given geopolitical jitters, but the cocoa price story longer-term looks like it's fighting an uphill battle with this much surplus sitting around and chocolate makers cutting back. I'd be watching how long this short-covering lasts before reality reasserts itself.