"Volatility at Coin Level"… Cocoa Prices Plunge 20% in One Day

Cocoa

This year, cocoa futures prices, which had soared to unprecedented heights, plummeted by about 20% in a single day. This was due to growing expectations that the cocoa crop, the raw material for cocoa, would improve as wet weather was forecasted in major producing countries. Cocoa prices are expected to continue to fluctuate sharply for the time being, centered on local weather conditions.

According to Bloomberg on the 13th (local time), the July delivery cocoa futures price on the New York Futures Exchange fell about 19.8% to $7,130 per ton compared to the previous day. This is the largest drop since 1960.

This is the result of expected increased rainfall in West Africa, which accounts for 80% of the world's cocoa production. Donald Keaney, chief meteorologist at Maksa Technology, said, "The wet weather in cocoa-producing countries such as Ghana and Indonesia will improve the cocoa crop."

Last year, drought struck major producing countries in West Africa such as Ghana and C?te d'Ivoire, causing visible deterioration in the crop, which led to the unusual phenomenon of cocoa futures prices surpassing $10,000 per ton this year.

However, for cocoa production to increase significantly, it is analyzed that more rain must fall in C?te d'Ivoire, the world's largest producing country. Cocoa prices are likely to show high volatility depending on weather forecasts in the West African region.

John Goodwin, a commodity analyst at Arrowstream, forecasted, "If there are updates to weather forecasts in West Africa or signs of demand destruction, price fluctuations could be significant."

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