Cocoa prices have plummeted 12% in the last week, fueled by cratering chocolate demand and investors liquidating long positions. The agricultural commodity has struggled to sustain momentum since the summer after rallying toward $12,000.
December cocoa futures erased $48.00, or 0.68%, to $7,016 per metric ton at 17:41 GMT on Wednesday on the US ICE Futures exchange. They are at their lowest levels in nearly four weeks. Cocoa prices have suffered some of the largest selloffs in history this year, though they are still up 67% so far this year. Over the last 12 months, cocoa is up 105%.
The sharp selloff started after Jefferies analysts warned that chocolate sales are “notably underperforming” other food categories. This has been mainly fueled by higher prices, forcing consumers to transition to cheaper snacks.
Industry associations have registered better-than-expected cocoa demand. According to the National Confectioners Association, North American cocoa grindings rose 2.2% year-over-year to 104,781 metric tons. The European Cocoa Association showed that European cocoa grindings surprisingly surged 4.1% year-over-year to 357,502 metric tons.
Cocoa futures tanked after Reuters reported that brokers confirmed the liquidation of long positions by funds during thin and volatile trade patterns.
The crop outlook has improved after farmers in Ghana and the Ivory Coast, the two largest cocoa markets in the world, reported favorable growing conditions as the weather improved.
Meanwhile, Ivory Coast announced that it raised the fixed farmgate price paid to cocoa farmers by 20% for the 2024-2025 main crop.
At the end of August, cocoa prices found support after the International Cocoa Association increased its 2023-2024 global cocoa deficit estimate from 439,000 metric tons to 462,000 metric tons. This would be the largest deficit in six decades.
In other agricultural commodities, November corn futures rose $0.035, or 0.82%, to $4.325 per bushel. November wheat futures climbed $0.1375, or 2.3%, to $6.1275 a bushel. November soybean futures were flat at $10.57 per bushel. December coffee futures were flat at $2.564 per pound.