Volatility in the global cocoa market increases amid low liquidity and concerns in the chocolate industry

The cocoa market is currently experiencing volatility due to low liquidity, leading to significant price fluctuations. In response, the ICE exchange has reduced the cocoa margin to attract more investors and stabilize operations. However, challenges persist with a significant drop in cocoa inflows in Ivory Coast and concerns over smuggled cocoa. As Halloween approaches, confectioners are facing soaring production costs, leading to changes in product offerings and potential price increases for consumers. This situation presents challenges for both cocoa farmers and the chocolate industry, and the coming weeks will be critical in determining the direction of prices and profit margins.

By: Claudemir Zafalon The recent low liquidity in cocoa contracts has been a crucial factor in increasing market volatility, generating significant price swings. In response, the ICE exchange has taken steps to try to recover trading volume by reducing the cocoa margin to US$11,154 per contract. This strategy aims to attract more investors and stabilize operations, which have been heavily impacted by volatile market conditions. The situation in the world's largest cocoa producer, Ivory Coast, also presents challenges. The government reported that cocoa inflows through October 6 totaled 12,960 tons, a significant drop compared to the 50,138 tons recorded in the same period last year. Despite the large difference highlighted, the Ivorian government is exercising intense surveillance over the outflow of smuggled cocoa, which is occurring in significant volumes. In the United States, certified stocks at ports account for 2,03,756 bags of cocoa. With cocoa supplies from Ivory Coast ...