Fastest weekly drop in cocoa prices of all time

Cocoa prices have stood out in the commodities market this year due to sharp fluctuations.

On the Intercontinental Exchange, the price of cocoa per ton, which had nearly tripled since the beginning of the year to reach a historic peak of 11,722 dollars, fell by 24.4 percent this week, recording the fastest weekly decline of all time.

The price of cocoa per ton dropped to 8,010 dollars this week. Cocoa prices had hit record highs after major cocoa factories in Ivory Coast and Ghana decided to cut or halt production because they could not cover seed costs.

While poor weather conditions such as prolonged drought and heavy rainfall were cited as the main reasons for problems in cocoa supply, plant diseases also affected the crop. In particular, the CSSVD virus, which causes cocoa trees to die, was among the leading factors negatively affecting production.

The increase in cocoa exports from Nigeria reveals that concerns regarding cocoa supply are diminishing.

Cocoa prices fell sharply following margin calls made to investors. Due to record-level prices, many traders and chocolate companies are postponing cocoa bean purchases for the upcoming season. This is negatively affecting cocoa demand.

Futures and commodities market expert Zafer Ergezen noted the following in his assessment:

"Cocoa prices had been rising for some time. Of course, one of the biggest reasons behind this was the decrease in production, especially in West Africa. Why did this production decrease? When rainfall was higher than expected, above seasonal norms, the cocoa trees became diseased. Because of this, the harvest decreased. So why was West Africa so important? Because approximately 60-70 percent of the world's cocoa production comes from this region. That is a very significant figure. Naturally, when the harvest there drops, supply shows a serious decline. When it shows a decline, prices move upward rapidly."

PROFIT-TAKING COMES TO THE FORE AFTER RECORD PRICE LEVELS

Stating that concerns regarding supply have begun to gradually subside, Ergezen used the expressions, "One of the biggest effects was, of course, a price that approached tripling in one year. This naturally leads to the first profit-taking as well. Positions are being closed."

Ergezen stated that no further decline is expected on the supply side from now on, adding that there is an expectation that supply will gradually begin to increase again, which will lower prices.

For this reason, noting that prices have started to pull back in futures and spot markets, Ergezen added that this decline could begin to stabilize gradually.

News Source: AA