Sales of next season’s cocoa crop in top producer Ivory Coast are off to a slow start, as exporters reel from a blistering rally that has made it riskier.
February 20, 2025 at 1:27PM EST -- Sales of next season’s cocoa crop in top producer Ivory Coast are off to a slow start, as exporters reel from a blistering rally that has made it riskier to hedge purchases.
That’s because traders typically hedge their bean purchases by selling futures. But as futures rallied, the Intercontinental Exchange Inc. has raised the amount that traders — including those who’ve hedged physical holdings — are required to pay in margins, which serve as an insurance policy to cover potential losses.
The sluggish forward sales come at a time when global cocoa supplies have faced back-to-back shortages, propelling the most-active futures to record levels late last year. That has made it costlier to hold positions in the market, prompting traders to be more cautious about buying beans this far in advance, according to two traders who asked not to be identified.
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