Cocoa prices in London fell over 7.6% on Friday, reaching just above £7,300 per tonne, marking the lowest level since November. Despite this decline, prices remain high, raising concerns regarding demand destruction that could help balance the market.
The CFTC’s weekly positioning data revealed that money managers reduced their net short position in wheat by 21,232 lots to 61,577 lots as of 18 February, with a decrease in gross shorts by 26,733 lots to 132,334 lots. In corn, net longs for managed money increased by 21,144 lots to 353,533 lots during the same reporting week.
Cocoa prices have taken a sharp step down. Even with that hefty drop, they’re still towering over historical averages. This is where the worry comes in. If prices stay steep for too long, fewer buyers might be willing—or even able—to pay up, curbing consumption and offering a natural cooldown for the market. Whether or not that materialises remains to be seen, but it’s something to keep on our radar.
Meanwhile, the latest positioning report from the CFTC sheds light on how traders are adjusting. Speculators pulled back from their short bets in wheat in good measure. We saw a considerable dip in total short positions, which means fewer traders are betting on prices to tumble further. When short positions get trimmed like this, it suggests sentiment is shifting—perhaps traders think wheat has already fallen far enough or that near-term conditions are less bearish than before.
In corn, there was an expansion in bullish bets. The increase in net longs indicates more traders are optimistic about the direction of prices. Whether this enthusiasm is rooted in supply concerns, demand strength, or broader market factors is something we’ll continue watching closely.
These positioning shifts aren’t just numbers on a page—they give us clues about changing trader opinions. When investors unwind short bets in one market while boosting long positions in another, it often hints at new convictions forming. This kind of repositioning can create shifts in liquidity and price momentum.
For those trading derivatives, this means the next few weeks could require extra attention to positioning dynamics. If fresh data supports the moves we’ve seen in wheat and corn, momentum might continue. But if market conditions change again, positioning could flip just as quickly. Keeping an eye on money flows will be just as important as tracking fundamental factors.
