Beleggen in cacao

[nobody]

ECOFIN proposes Ivorian cocoa sales’ system overhaul to benefit farmers and state amid rising cocoa prices

IVORY COAST—The Ivorian forward sale of cocoa is currently under scrutiny for potentially hindering both farmers and the state from maximizing profits amidst rising cocoa prices, as revealed in a recent report by the Economic and Financial Affairs Council (ECOFIN), a financial news and analysis company.

With Ivorian cocoa prices surpassing the $10,000 per ton mark this week, there’s growing concern that the existing advance sales system may need reevaluation to adapt to the market.

The system, managed by the Coffee-Cocoa Council (CCC), operates on an anticipation marketing model, where the cocoa prices are predetermined at the beginning of every campaign.

This means that 70-80% of the harvest is sold in advance to local or foreign exporters through electronic auctions, with the remainder sold through cash transactions.

While this model has historically provided stability by cushioning producers from volatile international prices, ECOFIN argues that it may now be limiting potential gains amid the current surge in cocoa prices, calling for reforms to introduce a greater flexibility.

ECOFIN’S report criticized the system’s lack of responsiveness to current market conditions- the fixed advance sale price, based on past season prices and adjusted differentials, fails to reflect the significant price fluctuations seen in the current market.

The report also mentioned the system’s rigidity as a stumbling block that limits opportunities for quality differentiation and additional premiums for producers.

This means that, unlike producers in other countries who can negotiate bonuses for quality improvements, Ivorian cocoa producers are constrained by fixed regulatory prices, with no provisions for quality-based incentives.

In response to these shortcomings, ECOFIN is advocating for a more flexible approach that will benefit both the country and farmers.

Suggestions put forward by the report include introducing clauses to allow for price adjustments based on current market movements and potential premium payments in case of price surges beyond agreed thresholds.

This proposed overhaul aims to align the advance sales system with current market realities and ensure that both farmers and the state can fully capitalize on the shaky cocoa market.

https://www.foodbusinessafrica.com/ecof ... oa-prices/

[nobody]

Cocoa Tech Revival in Brazil Offers Some Relief From Hot Market

(Bloomberg) -- Valuable cocoa beans pour from the pipe of what looks like a small train making its way through tropical fruit trees in Brazil, leaving only husks on the ground.

The machine is bringing automation to the husking of ripe cocoa pods — a significant improvement over the traditional labor-intensive harvesting process of picking fruit from trees and manually cutting through the stalks with a blade.

It’s part of an effort by agricultural powerhouse Brazil to lead the way to a dramatic modernization of cocoa production methods, helping to spur an industry revival in the country. More broadly, the shift may bring much-needed assistance to global markets facing severe bean shortages from top growers in West Africa.

Cocoa prices have more than doubled this year to a record as extreme weather, disease and structural issues have hurt supplies from Ivory Coast and Ghana. Cocoa futures in New York rose as much as 5.2% to more than $9,700 per ton on Monday.

Low pay has hampered farmers’ ability to invest in improvements, limiting how much cocoa their trees can yield. That’s bringing more global attention to Brazil, which has plenty of agricultural know-how and farmers with financial resources to invest in new crops.

“The production model in Africa tends to run out of steam over time, and that creates possibilities for other regions,” said Laerte Moraes, a managing director for Cargill Inc.’s South American food ingredients unit. “Brazil has all the conditions to be a very efficient and effective cocoa producer.”

The giant trading company is among the groups working with new technology to grow cocoa in atypical areas in Brazil. After a recent agreement with farmers from the savanna region of Cerrado, Cargill is now in talks with chocolate makers, looking to build partnerships with farmers for a next phase in cocoa investments.

Brazil produces less than 5% of global cocoa supplies, and is currently a net importer of beans. Once a prominent global supplier, the South American nation lost it all to a tree-killing disease known as witches’ broom that decimated crops in the 1980s.

Brazil, where the main television channel is updating an 1990s telenovela about cocoa farmers, is set on a revival. The country’s cocoa commission Ceplac is seeking to roughly double output to more than 440,000 tons a year by 2030. While still far from top supplier Ivory Coast, that would turn Brazil into one of the top producing countries, likely surpassing Nigeria and Cameroon.

Previously, Brazil used production methods that confined cocoa to a few small, more humid areas under the shadows of taller native trees. Now, the new machines can operate under bright sunlight and on plain land slots.

Combined with better irrigation and large use of fertilizer and pesticides, as well as the selection of tree seedlings that can resist exposure to sunlight, producers are betting they can make cocoa crops more productive, and more resistant to disease and extreme weather.

Several farmers working with the new techniques say productivity can reach about 3,000 kilograms per hectare, much higher than the national average of 491 kilograms per hectare.

Widespread irrigation is allowing cocoa planting in dryer areas — similar to an expansion with soybeans and corn in the same regions that helped Brazil become a major exporter of those commodities.

“A lot of people who are new to the cocoa industry are starting to explore it,” said agronomist Silvino Kruschewsky Neto, who consults for several farms in the country. “They have a very well-formed business vision, and a culture that dictates the crop has to be productive and adopt technology.”

Farming group Agrícola DM4 in the southern part of Bahia state is using the train-like harvesting machine to reduce costs. On a farm that also grows black pepper and coffee, cocoa is expanding faster than initially planned as surging prices mean the crop is becoming more profitable, according to Fernando De Martins, chief executive officer of the group.

“Producers are motivated to plant even more,” De Martins said. “The cocoa price level has changed, and I don’t believe we’ll see low prices for the next couple of years.”

Read More: Why Cocoa Prices Spiked, What It Means for Consumers:

Even PepsiCo Inc. is upbeat about cocoa in Brazil. The company — which uses cocoa in an instant chocolate drink that’s popular in Brazil — saw good results after trying cocoa plantations in combination with coconut trees located at some of Brazil’s driest regions.

“The vitality of cocoa plants surprises even the experts,” said Ricardo Tinoco, an agronomist at the company. Pepsi is considering expansion across 450 hectares (1,112 acres) on one farm it owns, and could also take cocoa to some farms in the region that supply it with coconut water.

Similar results were seen at Schmidt Agricola, the company that partnered with Cargill two years ago to foster new techniques for cocoa. The crop development has been encouraging, with an “abnormal” amount of fruit already developing in the trees, Cargill’s Moraes said.

While it will take time before some of the more recently planted areas start bearing fruit, the new farming methods are starting to get the world’s attention as global markets seek alternative cocoa suppliers.

“Brazil has turned into the talk of the town,” De Martins said.

https://finance.yahoo.com/news/brazil-c ... 00643.html

[nobody]

Cocoa prices climb for fifth day as tight supply pain lingers

(April 11): Cocoa futures rallied for a fifth day as expected tighter supplies in the coming months push prices to near record levels.

The most active contract in New York rose as much as 2.9%. Prices also jumped in London. Dry weather over West Africa is now threatening the mid-crop harvest, which is currently underway, according to The Hightower Report.

A global shortage of cocoa has caused futures to soar above US$10,000 (RM47,480) per ton — more than double the level at the start of the year — and hit a record earlier this month. The surge has begun to pressure some traders, while encouraging growers to return to the market.

Ghana, one of the world’s top producers, has begun talks with traders to delay deliveries due to a lack of beans, according to people familiar with the negotiations. The country has faced difficulties fulfilling its contracts in recent seasons due to lower output, forcing it to roll over deliveries and putting more strain on the global market.

Ivory Coast has also asked buyers to wait until the mid-crop to help ease the scarcity.

Prices

-The most active cocoa contract rose 1.8% to US$10,050 per ton at 7.56am in New York

-Arabica coffee also gained, while raw sugar fell

https://theedgemalaysia.com/node/707658

[nobody]

Nieuw record voor cacaoprijs

Cacao - de belangrijkste grondstof voor chocolade - is maandag naar een nieuwe recordprijs gestegen. Er is weinig beterschap in zicht voor de wereldwijde bevoorrading.

Op de termijnmarkt van New York stijgt de prijs voor een ton cacao naar 10.702 dollar, of de hoogste prijs ooit.

De prijs voor de grondstof zit al maanden in de lift en is alleen al in 2024 verdubbeld.

Slecht weer en ziektes teisteren de plantages in het westen van Afrika. De aanvoer van cacao in de havens van Ivoorkust ligt 30 procent lager dan vorig jaar.

https://www.msn.com/nl-be/financien/nie ... 08b8&ei=16

[nobody]

Ivorian cocoa bean producers call for increased purchase prices

IVORY COAST – Le Synap CI and l’anaproci, two cocoa bean producer organizations in Ivory Coast, are leading coffee producers in urging authorities to increase purchase prices.

These two prominent organizations representing cocoa farmers raised their voices after the Ministry of Agriculture, Rural Development, and Food of Ivory Coast recently set purchase prices for cocoa beans at 1.5 thousand West African francs ($2.5) per kilogram.

These organizations were arguing that these prices do not provide farmers with an adequate safety margin in case of crop loss – Coffey Kang, the head of l’anaproci, insists that prices should be raised to 2.5 thousand West African francs ($4) per kilogram.

This call for higher prices has gained political support as well. Simon Dojo, representing the Democratic Party of Côte d’Ivoire, emphasized that “over 80% of our cocoa bean producers live below the poverty line,” despite the country supplying 40% of the world’s cocoa beans.

Following the example of Ivory Coast, Ghana, the world’s second-largest exporter of cocoa beans, is also considering price adjustments.

For instance, Ghanaian President Nana Akufo-Addo recently ordered an increase in purchase prices by 58.2% from 20928 cedi ($1560) per ton to 33120 ($2460) per ton by the end of the 2023-2024 season.

This comes as cocoa bean futures on the world market reached record highs amid the spread of plant diseases and adverse weather conditions.

In the 2023-2024 season, global cocoa bean supplies are expected to decrease by approximately 8%.

Over the past 12 months, cocoa bean prices have surged by 166% and 189% in the futures markets in New York and London, respectively.

The GlobalData portal forecasts that the global harvest in the 2023-2024 season will amount to 4.5 million tons, reflecting a decline of 340 thousand tons compared to the previous season.

https://www.foodbusinessafrica.com/ivor ... se-prices/

[nobody]

Why the world of chocolate is in crisis

(April 18): The world of chocolate is facing such immense cocoa shortages that the wild trading lured an unlikely player — Pierre Andurand, a hedge-fund manager best known for his bets on oil.

By early March, prices had already more than doubled in just a 12-month span. At that point, many speculators were calling it quits and slashing their bullish wagers. That’s when Andurand saw an opportunity to go long.

The signs were all there for a massive deficit: the world had enjoyed chocolate on the cheap for decades, trees were older and crop disease was rampant in the West African countries that supply about half the market. A bit of bad weather was the tipping point for output from Ivory Coast and Ghana, with many traders now fearing production in the growers has entered a long-term retreat. Futures quickly surged about 70% from the start of March to a record this week.

For the world’s chocolate makers, the crisis is here. Plants have been forced to shutter from Malaysia to Germany and Chicago. Firms that were caught on the wrong end of the rally are getting snarled in lawsuits. And now, a lack of liquidity also means that the market’s next stage is likely to be riddled with erratic price moves that raise the specter of company failures.

“The scars of this crisis may long be visible in cocoa’s volatility,” said Tristan Fletcher, chief executive officer at ChAI, a platform that uses AI to analyse commodity markets. “Speculative players are coming in and out of positions much more rapidly, which will add to this choppiness. This means that the markets are much more likely to swing violently.”

Commodities markets are notoriously volatile, but the speed and severity of the rally in cocoa has caught out even seasoned market players and triggered chaos across the global supply chain for the crop, from struggling West African farmers, to European commodity brokers, to US candy manufacturers.

This week, futures reached a record US$10,760 a metric tonne, a level that would have previously been unthinkable for most traders and is about double the previous peak set in the 1970s. Before this rally, the New York market had largely remained below US$3,500 since the 1980s.

Citigroup Inc sees prices climbing to as high as US$12,500 in the next few months. Andurand has forecast futures to break US$20,000 this year. The oil trader’s hedge fund took a small-sized long position in cocoa in early March, a person familiar with the matter said earlier this month.

The torrid pace of the increases has driven out scores of investors who don’t want to get caught flat-footed. And more importantly, many can no longer afford to trade — the cost for margin calls to back a firm’s position has skyrocketed.

Trading of cocoa futures has reached historically low levels, with a measure of the amount of outstanding contracts slipping to the lowest in 12 years. The market is now stuck between extreme crop shortages and dangerously low liquidity.

“It is the lack of physical activity — confined only to desperate covering of nearby physical contracts — that has caused the drying up of their normal futures activity, reducing the liquidity,” said Pam Thornton, a veteran commodity trader at Nightingale Investment Management, who’s best known for her role at former cocoa hedge fund Armajaro Asset Management. “So if you have to buy futures, you can easily move the market very quickly.”

When firms can’t pay margin calls to back up their hedges, they are forced to buy futures back, sending prices even higher and pushing even more people out of the market. That vicious circle of distress was also seen in recent years during the nickel meltdown and when European natural gas prices spiralled out of control following Russia’s invasion of Ukraine, rippling out to consumers, manufactures, currencies and economies.

“That’s what worries me the most,” said Jacques Torres, founder and chief executive officer of New York-based Jacques Torres Chocolate, an artisan candy maker. “If this is the future, then we are going to see a lot of people out of business.”

Double-digit production declines are forecast for cocoa crops in Ivory Coast and Ghana, which account for about 50% of supplies. The shortage is so severe that both countries are rolling contracts to future harvests.

The International Cocoa Organization (ICCO) predicts production will trail demand by 374,000 metric tonnes in the 2023-2024 season, the third straight shortfall. Chocolate maker Barry Callebaut AG sees a deficit of 500,000 tonnes, equal to about a 10th of the global market, and the company sees another shortfall next year.

Andurand has said his firm expects global cocoa bean production to decline by at least 18% on an annual basis.

“We have almost nothing more to offer for the rest of this season,” said Nicholars Quartey, 67, who cultivates 12 acres of the crop in the town of Suhum, about 100 kilometres north of Ghana’s capital of Accra.

Production is highly concentrated in Ivory Coast and Ghana, which leaves the market very vulnerable to what’s happening to crops in those countries. Output in Nigeria and Cameroon has been stuck in a small range for a long time, and rivals in Asia have seen declines. What’s happening in cocoa is now a wake up call for the coffee industry, which has seen production concentrate in just two countries: Brazil and Vietnam.

The historic cocoa shortage also reveals other problems that have plagued the region.

For decades, farmers in Ivory Coast and Ghana were chronically underpaid. While futures have surged in nominal terms, they haven’t kept up with the pace of inflation. That’s even 12 years after Ivory Coast nationalised its cocoa sector as a way to improve farmer livelihood — a condition for receiving debt relief from the International Monetary Fund following a 2011 civil war.

Prices offered to growers are set by governments in both countries, which locks in sales a year in advance. As a result, growers are being paid way less than the prices set in the international market and can’t respond nimbly to supply and demand changes.

“What you’ve got to do is give the farmer a signal that, come the next main crop, it’s worth investing in his farm and investing a lot more than he has done in recent times,” said Steve Wateridge, head of research at Tropical Research Services.

Ghana and Ivory Coast recently did raise some prices for farmers, but it’s yet to be seen whether the increase was enough to encourage more supply.

Few producers have access to irrigation or modern farming techniques, making them vulnerable to the weather. They also haven’t had enough money to invest in fertilisers and other crop chemicals after prices surged in recent years.

Meanwhile, there has been a lack of innovation for the plants. Because cocoa is a tree crop that can last for 25 years and isn’t planted for each harvest like corn or soybeans, there’s little incentive for companies such as Syngenta AG to invest in producing better seeds. And back in 2018, when the world was facing a surplus, Ivory Coast stopped the distribution of a new seedling that would offer higher-yielding, more resistant trees.

“I know so many farmers who are leaving the cocoa sector: They’re abandoning their cocoa farms and going to rubber plantations — others are going to coconut plantations,” said Issifu Issaka, who farms cocoa on 12 acres in Ghana. He also points to an upsurge in small-scale mining in the area, known locally as galamsey, that has polluted the water.

“The water bodies in the cocoa growing regions have gone — we’ve lost them,” Issaka said.

Consumers have yet to see the full impact of the rally. Godiva’s parent, London-based Pladis Foods, is still finalising pricing plans but expects percentage increases globally to average in the “high single digits”, according to chief executive officer Salman Amin.

Growers in places like Cameroon, Nigeria, Ecuador and Brazil — where prices aren’t controlled by governments — are taking steps to increase output.

“With this cocoa price, the fever has set in,” said Laerte Moraes, a managing director for Cargill Inc’s South American food ingredients unit.

Still, new deforestation regulations in the European Union — a major consumer — are exacerbating the difficulties for farms to expand. It’s also unclear how much cocoa will be able to reach European shores, putting more pressure on already declining exchange-certified stockpiles. It’s those beans that back benchmark futures traded in London.

It’s going to be some time before any new production hits the market. Cocoa trees can take between three- to five years before they start yielding crops. By that point, it may be too late for some candymakers to recover.

“A lot of the smaller players — the bean to bar guys, the chocolatiers — they are beyond stressed,” said Judy Ganes, president of J Ganes Consulting. “For those players, they might just disappear.”

https://theedgemalaysia.com/node/708519

[nobody]

Cocoa soars above US$11,000 a tonne as processing pace holds up

(April 19): Cocoa futures hit a new high in New York — topping US$11,000 (RM52,624) a metric tonne — as the pace of processing in chocolate factories holds up even in the face of a global supply crunch and record prices.

Figures released Thursday showed so-called grinds — where cocoa is turned into butter and powder used in confectionery — fell only about 2% in Europe and inched lower in Asia during the first quarter from a year earlier. Processing in North America ticked up nearly 4%. That comes even as futures prices have more than doubled since the start of 2024.

The grindings numbers are “nowhere near the deterioration we needed to end this rally,” said John Goodwin, a senior commodity analyst at ArrowStream Inc. “It’s crazy how resilient those numbers were.”

New York futures rose as much as 11% to a record high of US$11,126 a metric tonne, the biggest intraday jump in over a month. The most-active contract in London also surged nearly 11%.

The market is watching processing data to get an idea of whether the rally is starting to hurt demand and how hard it’s becoming for chocolatiers to obtain beans, though the data risks becoming a less reliable gauge of demand as shortfalls make it more difficult to source cocoa.

Paul Joules, an analyst at Rabobank in London, said the grindings figures are “an indication that for now demand is holding up despite current pricing,” adding that “demand destruction will come, but clearly it’s taking longer to filter into grind data than the market was anticipating.”

But the small drop in European grinds also suggests that processors in the region tried to cover for closures in West African facilities, said Judy Ganes, president at J Ganes Consulting. That means global processing in the first quarter could still have been level or lower.

“Definitely can’t say it is bullish,” Ganes said of the European grindings figures. “It does not mean that use is not affected by the higher prices.”

The International Cocoa Organization in February estimated that global grindings will fall almost 5% this season, driven by a 7% drop in African processing. A severe cocoa shortage and the ensuing price spike has forced some processors to halt production intermittently or pay premiums to book beans from minor growers to secure supplies.

The pace of grindings could “remain subdued into 2025” as strong first-quarter data suggest that processors will need to replenish stockpiles of beans at higher prices, Bloomberg Intelligence analysts Diana Gomes and Ignacio Canals Polo wrote in a Thursday note. Consumer demand will also stay under pressure as recent cocoa price increases trickle down to retail shelves, the analysts said.

https://theedgemalaysia.com/node/708566

[nobody]

Wil de consument duurzame cacao, dan zal die daarvoor moeten betalen

Op de Wereldcacaoconferentie, die nog tot woensdag doorgaat in Brussel, lijkt iedereen het erover eens dat de cacaoboeren een rechtvaardige prijs moeten krijgen voor hun cacao.

De vraag blijft wie dat geld zal ophoesten. "Iemand moet betalen. Aan het einde van de waardeketen zal dat de consument zijn", zegt Michel Arrion, directeur van de Internationale Cacao-organisatie (ICCO), maandag.

Op de termijnmarkt in New York is de cacaoprijs vrijdag met meer dan 6 procent gestegen tot een nieuw record van 11.722 dollar per ton.

Ondanks de ongezien hoge cacaoprijs, gaan de cacaotelers echter gebukt onder armoede, een veelkoppig monster dat ook als kinderarbeid en ontbossing op de plantages opduikt.

"Hoe kunnen we zo'n weinig rechtvaardige verdeling van de waarde in de hele keten van cacao tot chocolade toelaten?", vroeg koningin Mathilde maandagochtend in haar toespraak. "Rechtvaardigheid vraagt om een verhoging van de prijs die betaald wordt aan cacaoproducenten", zei de vorstin.

Die opvatting wordt op de Wereldcacaoconferentie, die in het teken staat van hogere prijzen voor duurzame cacao en een rechtvaardige verdeling van de waarde in de hele keten, breed gedragen. Alleen is het niet duidelijk wie die verhoogde prijs zal betalen.

"In een reep chocolade vertegenwoordigt de waarde van cacao zes procent", schetste Arrion. "We willen dat het relatieve deel van de cacaoteler stijgt, maar ik denk dat dat niet mogelijk is, want niemand wil zijn marge in die reep van 100 procent delen. Niemand.

Allen zullen ze zeggen dat ze een kleine marge hebben", vervolgde hij. "We zeggen niet dat de boeren een groter stuk van de taart willen, we zeggen dat ze een grotere taart willen om te verdelen. Het is enkel door de grootte en de waarde van de taart te verhogen, dat iedereen tevreden zal zijn."

https://www.msn.com/nl-be/financien/nie ... 6d110&ei=7

[nobody]

Cocoa price swings are the craziest since the 1970s

(April 24): Cocoa resumed gains in New York, with prices the most volatile in almost five decades amid uncertainty over a historic crunch and as traders pull out of the market.

Futures have soared about 160% already this year as poor West African harvests leave the world desperately short of beans. But the rally has made it more expensive to maintain positions, prompting investors to close out trades, draining liquidity and making the market more vulnerable to large price swings.

Cocoa jumped as much as 4.5% on Wednesday, snapping an almost 9% two-day slide. That helped push a 60-day measure of volatility to the highest since 1977.

Cocoa’s rally to a recent record above US$11,000 (RM52,558) a tonne means traders — including those who’ve hedged against physical holdings — have to come up with more money to pay margin calls, which work as an insurance policy to cover potential losses. When they can’t do that, they’re forced to close out their positions. That’s pushing down open interest, the number of outstanding contracts.

There’s still much uncertainty over global supplies. Still, a shift from the El Nino weather phenomenon to La Nina will likely help global production recover next season, and that weighed on prices early this week, The Hightower Report said in a note.

Traders will also keep a close eye on short-term weather and crop conditions in the crucial West Africa region.

“Rainfall over West African growing areas this week is expected to benefit the region’s upcoming production and is the first positive news for crop prospects in quite a while,” ADM Investor Services wrote in a note. The region’s mid-crop harvest is expected to ramp up by the middle of May and reach full speed by the mid-June.

https://theedgemalaysia.com/node/709253

[nobody]

Cocoa plunges most ever with trader exodus sparking huge moves

(April 30): Cocoa plunged by the most ever, slumping as much as 27% in just two days, with price swings becoming more extreme as fewer investors and companies can afford to maintain trading positions.

Futures slid as much as 13% in New York on Tuesday (April 30) before paring some of the loss after tumbling the previous day by the most in data going back to 1960. The retreat marks a stark turnaround from earlier this month, when prices soared to a record above US$11,000 (RM52,497.09) a tonne due to a historic supply crunch, raising the cost of making chocolate.

Even with the recent pullback to the lowest in a month, cocoa has still roughly doubled since the start of the year. The rally made it more expensive to keep positions and prompted investors to close out trades, which has drained liquidity and made the market more vulnerable to large price swings.

Cocoa’s rally had made it more expensive than copper, and the big question was how far prices could reach. Pierre Andurand, a hedge-fund manager best known for his oil wagers, bet on higher cocoa prices ahead of the massive recent surge. He forecast futures to break US$20,000 this year.

The magnitude of the recent drop was a surprise, though the declines could prove brief because the fundamental picture hasn’t changed, said Fuad Mohammed Abubakar, head of Ghana Cocoa Marketing Company UK Ltd, a subsidiary of the country’s regulator.

“The market action in the last three days goes to show the fall is always easier and faster than the climb,” he said.

Harvests in West Africa have been battered by crop disease and poor weather this season, putting the world on track for a third straight supply deficit and forcing both Ivory Coast and Ghana to roll forward supply contracts. The amount paid to farmers there is also well below the global market prices, making growers less able to invest in plantations and boost production.

Lower prices would offer some relief to chocolate makers, who have seen costs soar and have been scouring the world for cocoa beans. Shares of Barry Callebaut AG, which supplies some of the biggest consumer chocolate brands, climbed as much as 6.6% on Tuesday. Lindt & Spruengli AG’s stock also rose.

Maintaining Positions

Cocoa’s advance this year has meant traders — including those who’ve hedged against physical holdings — have had to come up with more money to pay margin calls, which work as an insurance policy to cover potential losses. When they can’t do that, they’re forced to close out positions. That has helped push down open interest, or the number of outstanding contracts, curbing liquidity.

Looking forward, the end of the El Nino weather phenomenon could help harvests recover next year, Marijn Moesbergen, sourcing lead at Cargill Inc, said at the recent World Cocoa Conference in Brussels. Prices may have overshot and the market needs to find a new equilibrium between supply and demand, he said.

Prices:

- The most-active cocoa contract was last down 5.9% at $8,405 in New York. London cocoa futures slid 8.4%.
- In other soft commodities, arabica coffee declined 1.5% and raw sugar fell 0.9%.

https://theedgemalaysia.com/node/709963