The chocolate market is reeling. The price for cocoa on the stock market collapsed

After reaching record highs in early April, the price of a ton of cocoa has seen an unprecedented collapse in the last half century. Prices have fallen by about 27% in two days as investors find it increasingly difficult to maintain their positions in the stock market.

On Tuesday, April 30, at the New York Stock Exchange, cocoa futures for delivery in June were down 13% at one point. They fell as much as 17% on Monday, the biggest one-day drop since 1960. This price rebound represents a significant change from earlier in the month, when prices hit an all-time high of more than 11,000 dollars a ton, which made chocolate production more expensive, reports Bloomberg, according to Agerpres.

Even after the declines of the last few days, the price per ton of cocoa is double compared to the beginning of the year. This advance made it more expensive to hold positions and caused investors to close trades, which reduced liquidity and made the market even more vulnerable to large price swings.

The magnitude of the declines in recent days was a surprise, but it is possible that this decline will be short-lived, because the fundamentals have not changed, emphasizes Fuad Mohammed Abubakar, president of Ghana Cocoa Marketing Company UK Ltd.

“Market developments in recent days show that a fall is always easier and faster than an increase,” says Abubakar.

In the past six months, global cocoa prices have tripled, after adverse weather developments and disease reduced the production of cocoa beans in Ivory Coast and Ghana, which together are responsible for about 60% of world production. In addition, the prices that cocoa farmers in Ivory Coast and Ghana receive for their beans are well below world prices, so farmers in these countries cannot invest in plantations to increase production.