Cocoa futures on the ICE market saw a dramatic decline, dropping over 6% on Wednesday, marking significant losses for the second straight session.
This downturn comes as investors decide to cash in on recent gains, despite ongoing concerns about dwindling supplies in West Africa.
London’s May cocoa contract dropped 6.6% to 5,134 pounds/ton, after reaching a record high of 5,605 pounds.
Meanwhile, in New York, the May cocoa contract experienced a 7.1% decrease, landing at 5,994 dollars per ton.
Analysts appeared unfazed by the downturn. “Traders must await first-quarter data on consumers and origin products to confirm demand destruction.
Any bearish turnaround seems unlikely before the end of April or May,” Citi noted in a report.
The decline in cocoa futures reflects the complex interplay of market dynamics, including profit-taking by investors and the impact of supply concerns on pricing.
Despite the sharp drop, a cautious approach is warranted until more definitive demand and supply figures emerge.
This uncertain period highlights commodity market volatility, where prices react to perceived and actual supply-demand changes.