Just caught something interesting in the cocoa markets - prices are all over the place this week and it's basically a currency story. The dollar rallied to a 3+ month high which hammered NY cocoa (CCK26 down 0.20%), but meanwhile the pound dropped to a 3-month low and that boosted London cocoa (CAK26 up 1.04%). Currency symbols like DXY and GBPUSD are basically telling the whole story here.

But there's a bigger picture underneath. ICCO just raised their 2024/25 surplus forecast to 75,000 MT - first surplus in four years - and they're expecting global production to jump 8.4% year-over-year. Cocoa's been in a downtrend for seven weeks now with supplies looking really robust. Ghana and Ivory Coast are even cutting farm-gate prices by 30-35% because buyers are refusing to pay the official rates. When you see currency symbols moving like this combined with that kind of supply pressure, it's tough for prices.

The demand side is pretty weak too. Barry Callebaut reported a 22% drop in cocoa division sales volume, and European grindings fell 8.3% year-over-year in Q4 - worst Q4 in 12 years. Consumers are basically rejecting chocolate prices. There's some support from shipping costs pushing up due to geopolitical issues, and Ivory Coast shipments are down 3.6%, but that's not enough to offset everything else.

London cocoa hit a 3-year low on Monday after the ICCO news dropped. Rabobank recently cut their 2025/26 surplus estimate to 250,000 MT, which is actually a bit bullish compared to earlier forecasts, but the currency symbols and supply situation are still dominating the trade right now. Watching to see if these currency moves stick around or if demand can stabilize things.