Cocoa Market: Record Weekly Decline in Prices

Cocoa prices posted their fastest weekly decline of all time this week as supply concerns eased.

Cocoa prices stood out with sharp fluctuations in the commodity market this year.

The price per ton of cocoa on the Intercontinental Exchange, which has nearly tripled since the beginning of the year and reached a historical peak of $11 thousand 722, decreased by 24.4% this week, recording the fastest weekly decline of all time.

The price of cocoa per ton decreased to $8010 this week. Cocoa prices broke records when large cocoa factories in Ivory Coast and Ghana decided to cut or stop production because they could not cover seed costs.

While the main cause of problems in cocoa supply was bad weather conditions such as long-term drought and heavy rain, plant diseases also affected the crop. In particular, the CSSVD virus, which caused the death of cocoa trees, was among the factors that negatively affected production.

The increase in cocoa exports in Nigeria reveals that concerns about the supply of cocoa have decreased.

Following the margin calls made to investors, cocoa prices dropped sharply. Due to record prices, many traders and chocolate companies are postponing their cocoa bean purchases for the next season. This negatively affects the demand for cocoa.

Futures and commodity markets expert Zafer Ergezen, in his evaluation to AA correspondent, said:

“Cocoa prices had been rising for a while. Of course, one of the biggest reasons behind this was the decrease in production, especially in West Africa. Why did this production decrease? When the rainfall was more than expected and above seasonal norms, cocoa trees got sick. Therefore, the yield decreased. So why was West Africa so important? Because approximately 60-70% of the world’s cocoa production comes from this region. This is a very serious number. Of course, considering the yield here, naturally the supply shows a serious decrease. When it fell, prices went up quickly.”

Profit sales come to the fore after the record level in prices

Stating that the concerns about the supply are slowly starting to pass, Ergezen said, “One of the biggest effects was, of course, a price that approached three times in a year. This naturally leads to the first profit sales. Positions are closed.”

Ergezen stated that no further decrease is expected on the supply side from now on, and that there is an expectation that the supply will slowly start to increase again, which will reduce prices.

For this reason, prices in the futures and spot markets have started to come back, Ergezen said, adding that this decline may gradually begin to balance.

Source: AA / Prepared by Irem Yildiz

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