By Joe Hoppe


Cocoa future prices have slumped in their biggest ever one-day selloff, driven by improved weather forecasts and reduced market liquidity.

Futures fell 10% to $9,489 a ton, having reached as low as $9,411 earlier in the session. They have fallen more than 14% over the past week, but have still doubled in price over the past three months and set an all-time record of $11,722 on April 19.

The monthslong surge was driven by supply-side challenges in West Africa, where 70% of global cocoa is produced. Rains in West Africa have since increased the outlook for the mid-season crop, and the front contract showed signs of buying fatigue, so it only needed a spark to ignite a selloff, Saxo Bank's head of commodity strategy, Ole Hansen, told Dow Jones Newswires.

Liquidity in the market due to the intense volatility of cocoa's prices has also disappeared, so any kind of news--good or bad--will trigger strong fluctuations in price, Hansen said.

Friday's commitment of traders report saw broad selling of cocoa from funds, with the net long being reduced to a 14-month low as traders continued to exit an increasingly disorderly market, Hansen said.


Write to Joe Hoppe at joseph.hoppe@wsj.com


(END) Dow Jones Newswires

04-29-24 1120ET