The global cocoa market faces turbulence with an outflow of funds and high volatility

By: Claudemir Zafalon The global cocoa market, which directly influences the price of confectionery products such as chocolate bars and hot chocolate, continues to experience a period of instability and record volatility. After a recent technical correction, the price of the commodity has shown that it has not yet risen enough to balance supply and demand, maintaining pressure on the sector. One of the main changes in the cocoa scenario this year was the withdrawal of hedge funds from the futures market. These funds, which traditionally bet on price fluctuations to profit and help increase market liquidity, began to abandon trading futures contracts in mid-2023. The reason? Intense price fluctuations, driven by supply problems in West Africa, increased trading costs and reduced profits. The situation was aggravated in the first half of 2024, when cocoa prices reached record highs in April, pushing margins on the London and New York exchanges to unsustainable levels for many ...