European Commodities: Cocoa Prices Stay Hot Amid Continued Supply Challenges

European Commodity Winners This Week 

IBEX 35 Mini (May 2025) (EZK25), +6%

About 25% of the index is represented by European giants in the European energy, industrials and commodity space such as Iberdrola (IBDRY), Repsol (REPYY), ArcelorMittal (MT), and Endesa (ELEZY).

The index has topped others in Europe over the last five days, and one interesting driver has been ArcelorMittal rising by almost 15%.

Its primary product is steel used in various industries including automotive, construction, and energy.

ArcelorMittal’s Ukraine subsidiary increased its steel output by nearly 70% in 2024 due to rising domestic and foreign demand and the reopening of Black Sea ports.

This is an interesting fact contradicting a general “recession ahead” mood in the market.      

Cocoa #7 (Jul 2025)  (CAN25), +5.6%  

The International Cocoa Organization (ICCO) estimates a 7.8% increase in global cocoa production for the 2024/25 season, calculating around 4.84 million metric tons. However, problems persist with the two top producers Ivory Coast and Ghana (70% of global production), with consecutive years of bad harvests. 

Demand has been resilient despite price pressures with global cocoa processing volumes increasing and grindings declining much less than expected.

Cocoa prices, which peaked above $12,000 per metric ton in late 2024, have stabilized around $8,000–$8,500 per ton in April 2025. 

The outlook for the middle term remains bullish due to current supply challenges and perhaps declining prices towards the end of the year.

Technically, the July contract made a recovery from the last four sessions in a bullish ascent that broke the 10 and 20 EMAs. Still long traders need to see prices above the next big resistance: 6.55 (the 50 EMA) to encourage more positions. With the 14-day RSI at only 50.68 there is plenty of room for this in case that resistance is broken.

Aluminium Alloy 3M (Cash) (R5Y00), +4.5%

As of April 2025, the global aluminium market is experiencing a notable shift, transitioning from a previously anticipated deficit to a surplus, influenced by evolving supply-demand dynamics and geopolitical factors.

Goldman Sachs has adjusted its global aluminium demand growth projections downward, now estimating just a 1.1% increase in 2025 with the latest tariff revision influenced by recent tariff hikes from President Donald Trump. 

The automotive sector, a significant consumer of aluminium, is showing more weakness than anticipated, with less vehicle production, particularly in Germany.

As a result, the global aluminium market is now expected to experience a surplus of 580,000 tons in 2025.  

So the short term outlook from the fundamentals remains weak unless we see changes in the automotive sector or in the tariff policies.

European Commodity Losers This Week 

VSTOXX Futures (May 2025) (DVK25), -9.18%  

VSTOXX ($VSTX) levels have remained elevated above 20 in recent weeks due to geopolitical tensions and economic policy uncertainty from new tariffs imposed by the U.S.

Higher-than-average open interest has been observed in May and June contracts, indicating institutions are actively positioning for volatility. However, the tariff effect seems already digested in the market. The other big risk is the outcome of the current peace negotiations in the Russian-Ukraine war. More negative news here will keep the volatility at higher-than-average levels.
UK Natural Gas (May 2025) (NFK25),  -2%  

The United Kingdom has experienced a notable decrease in domestic natural gas production (one big factor is the current 75% tax on energy profits).

As a result, the UK has transitioned from energy self-sufficiency to importing over 40% of its energy needs.

There is also a sharp decline in gas demand thanks to higher energy efficiency and the supply of renewable sources.

Having said that, European and UK wholesale gas prices have double compared to last year and storage levels are declining fast:

1. EU gas storage facilities are approximately 34%–36% full, significantly lower than the 60% level at the same time in 2024.
2. The UK gas storage capacity is also under pressure, it amounted to some 2.23 terawatts hour (TWh) on April 1, 2025, accounting for 22.63 percent of technical storing capacity.

Technical Outlook: Prices are trading below the 10 (86.3), 20 (89.8) and 50 (97.9) EMAs marking a clear bearish mood. Having said we see in the last 8 sessions a rangebound action with bottom at 82.6 (strong support) and 86.3 (the 10 EMA) as strong resistance.

Range trading is the action for now, but any breakout south of 82.6 should encourage short positions. Long traders will be adding positions on any breakout above the 10 EMA.