U.S. cocoa futures tumbled more than $450 within 60 seconds before rebounding a whopping $349 in the next minute on Tuesday, a move that prompted ICE Futures U.S. to cancel some trades at the bottom of the range.
"All May 11 cocoa trades $3,399 (per tonne) and below will be cancelled by the exchange as part of its market supervisory function and consistent with its price spike policy," ICE spokesman Lee Underwood said in an email to Reuters.
May cocoa on ICE was down $77 or 2.1 percent at $3,618 a tonne at 1710 GMT after peaking at $3,712, the highest level for the second month since January 1979.
May cocoa on Liffe was down 57 pounds or 2.4 percent at 2,324 pounds a tonne after climbing to a seven-month high of 2,389 pounds earlier in the session.
The cocoa market was underpinned by concerns that Ivory Coast, the world's top cocoa producer, could edge into civil war, which would have a longer-term impact on cocoa supplies.
"Political events in the country have taken a turn for the worse," said Abah Ofon, an analyst at Standard Chartered Bank.
An export ban, sanctions against the country and bank closures have limited the local industry's activity.
"Reports on the ground indicate that farmers are likely to abandon their mid-season crop because of lack of access to finance for the rehabilitation of their trees," Ofon said.
"In our view, the bigger output risk will be on production prospects for the 2011/12 main season crop, owing to the disruption of normal banking activities, which will restrict pre-season financing," Ofon added.
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