Cocoa prices fell by almost 28% from Monday to Friday, approaching a record drop in quotations for this product since 1959, Bloomberg reported.
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How prices have changed< /h3>
Cocoa futures jumped to an all-time high of $12,000 a tonne two weeks ago amid supply shortages due to a third consecutive year of poor harvests in West Africa. But since then prices have fallen by 40%.
On Friday, May 3, cocoa fell in price at auction in New York to $6,990 per ton, losing 7.6%. As of 16:30 on May 3, a ton of cocoa cost $7,747. At London ICE, a ton of cocoa for delivery on July 24 was trading by this time at a price of $7,770 per ton.
Read: Prices for cocoa beans fell by 26% in two days
Bloomberg explains the sharp drop in quotes by the liquidity crisis. Buying more cocoa requires traders to hedge their purchases in the futures market. However, high volatility means that they will have to invest more money to cover margin requirements. This encourages them to close positions. As a result, the number of outstanding cocoa contracts in New York fell to its lowest level in more than a decade.
“It is important to emphasize that the decline in cocoa prices is primarily the result of trading maneuvers and not a restructuring of market fundamentals,” noted analysts at BMI Fitch Solutions. They stressed that they expect volatility to continue.
Recall
Earlier, Bloomberg reported that Ghana lowered its cocoa production forecast for the current season by 24% due to smuggling and unfavorable weather conditions. Production in the country may fall to a minimum in 14 years, the agency noted. According to the executive director of the Ghana Cocoa Council, Joseph Boahen Aidu, in the 2023/2024 season, which ends in September, production of 650,000-700,000 tons of beans is expected, compared with the previously forecast 850,000 tons.