March ICE NY cocoa (CCH26) on Friday closed down -89 (-1.50%), and March ICE London cocoa #7 (CAH26) closed down -43 (-0.99%).

Cocoa prices extended this week's losses on Friday, with NY cocoa falling to a 1.5-week low.  Favorable weather in West Africa is expected to boost yields and supply, which is undercutting prices.  Cocoa farmers in the Ivory Coast are reporting that a mix of rain and sunshine is helping cocoa trees bloom, and farmers in Ghana said rains have been regular and helpful to cocoa tree and pod development ahead of the harmattan season.

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Chocolate maker Mondelez recently said that the latest cocoa pod count in West Africa is 7% above the five-year average and "materially higher" than last year's crop.  Harvest of the Ivory Coast's main crop has begun, and farmers are optimistic about its quality.

The outlook for ample global cocoa supplies is bearish for prices.  Last month, cocoa prices tumbled to 1.75-year nearest-future lows on expectations of a bumper cocoa crop in West Africa.  Reports from cocoa farmers in the Ivory Coast stated that cocoa trees are doing well, and recent dry weather helped the harvested beans dry.  Also, cocoa farmers in Ghana said favorable weather is allowing cocoa pods to develop quickly.

Increased cocoa arrivals at ports in the Ivory Coast are bearish for cocoa prices.  Monday's government data showed that Ivory Coast farmers shipped 895,544 MT of cocoa to ports this new marketing year, from October 1 through December 14, up +0.2% from 894,009 MT in the same period a year ago.  The Ivory Coast is the world's largest cocoa producer.

Shrinking ICE cocoa inventories are supportive of cocoa prices.  ICE-monitored cocoa inventories held in US ports fell to a 9-month low of 1,641,641 bags on Friday.

Cocoa prices found some support on Tuesday, when Citigroup cut its 2025/26 global cocoa surplus estimate to 79,000 MT from a September estimate of 134,000 MT.

Cocoa futures also have support, as NY cocoa will be included in the Bloomberg Commodity Index (BCOM) starting in January, which could spark buying by passive commodity funds that track the index.  According to Citigroup, the inclusion of NY cocoa futures in the BCOM may lure as much as $2 billion of buying of NY cocoa futures into the first week of January.