After reaching record prices for cocoa beans, the market became very vulnerable, leading to an 8% drop in prices. This was reported by UNN with reference to Bloomberg.
Details
Côte d'Ivoire, a major cocoa producer, has raised prices for medium beans by 50%, while its neighbor Ghana is considering a similar decision. This move by the two largest producing countries could encourage producers to supply more beans and stimulate investment in their farms.
The cost of futures in New York fell by 3.9% to $9,150 per ton, making a prolonged drop of about 8% in three days.
After a very strong price increase during the first quarter, the cocoa market was vulnerable to a wave of profit-taking and additional prolonged liquidation, which led to a significant drop in prices from recent highs
The rapid rise in cocoa prices in the second half of March, from USD 8,000 per tonne to USD 10,000 per tonne, may have been driven by momentum rather than new fundamental changes in the market scenario, Citi Research analysts said, adding that the next two months could prove to be a turning point in the cocoa price cycle.
Recall
Cocoa futures hit an unprecedented $10,000 per tonne due to poor harvests in key West African countries, leading to a third consecutive annual supply shortage and concerns about the ability to produce enough cocoa beans.
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