Just caught the cocoa bounce yesterday - March futures up on dollar weakness, but honestly the rally feels pretty shallow given what's happening underneath. The real story is how badly demand has cratered. Barry Callebaut reported a -22% volume drop in their cocoa division last quarter, and the grinding reports are brutal. European grindings down -8.3% y/y, Asian down -4.8% - consumers just aren't buying chocolate at these price levels anymore.

On the supply side, it's almost the opposite problem. West Africa's looking at a solid harvest - favorable weather, bigger pods, the whole thing. Ivory Coast and Ghana farmers are reporting way better conditions than last year. Even with the Ivory Coast shipping slightly less cocoa this season (down 3.2% y/y), we're still drowning in supply. StoneX is forecasting a 287,000 MT surplus for 2025/26 alone, and global cocoa stocks hit 1.1 MMT, up 4.2% year-over-year.

The inventory picture's interesting though - after hitting a 10.5-month low in late December, cocoa stockpiles at US ports have been climbing back up. We're at a 2.5-month high now, which is bearish. Nigeria's the one bright spot - their exports fell 7% y/y and they're projecting an 11% production drop for their 2025/26 season. But that's just not enough to offset the global supply picture.

So yeah, that cocoa rally is nice to see, but the fundamentals are still pointing lower. Demand destruction + supply abundance is a tough combo to fight.