SINGAPORE: As of April, Hedgepoint Global Markets will be monitoring and developing regular market analyses on the global cocoa market, expanding its portfolio of sectoral analyses focused on risks, trends and economic impacts on the commodity chain.
This move comes at a time of high volatility in the sector. Last week, US President Donald Trump’s announcement of new trade tariffs provoked immediate reactions on global markets.
After recording a four-week high, the cocoa market began to feel the effects of the recent trade measures announced by the United States. Global cocoa prices began to retreat amid increased volatility, contributing to a scenario of uncertainty that had already been developing in recent months.
Last Tuesday, cocoa futures contracts maturing in May 2025 fell by 3.8% in London and 3.7% in New York, signaling a correction in the market after the significant rise. If the tariffs are maintained, changes in trade flows and processing routes are expected, with North American buyers looking for cheaper alternatives.
As a result, the market is already projecting a possible reduction in cocoa grinding in the United States, which could put pressure on the commodity’s domestic prices in the coming months. The movement also reinforces fears of a global recession, as the effects of trade barriers spread through various production chains.
If the announced tariffs are maintained, it is likely that there will be adjustments to the flow of trade and cocoa processing routes in the coming months, as US buyers look for more economical alternatives for their operations.
Among the possibilities evaluated by the market are redirecting beans to countries close to the United States that have lower tariffs and installed grinding capacity – such as Canada, Mexico, Brazil and Ghana. In this way, it would be possible to meet US demand for cocoa beans, butter, liquor and powder from processing in other origins.
Given this scenario, a reduction in cocoa grinding in the United States is expected and, consequently, a possible rise in domestic prices in the coming months – not only for cocoa, but also for other products in the confectionery chain. This intensifies fears of a recession in the US economy and reinforces the prospect of a drop in demand for the commodity, a topic that has been discussed since the beginning of 2024, when prices for the bean reached historically high levels.
The so-called “Liberation Day” adds another element of pressure on a market that has already been operating under strong volatility in recent years. The recent drop in prices came just after the market recorded its highest rise in four weeks, supported by the forecast reduction in the Ivory Coast’s intermediate crop (April to September 2025) and the negative revision of the expected production for the 2024/25 crop in Ghana – the two main global producers.
Even so, this information was already priced in, and the market continues to point to a downward trend in the medium term, driven by expectations of a slowdown in demand, normalization of cocoa arrivals at ports and improved weather conditions in West Africa, with an increase in rainfall in recent weeks.
