Cocoa’s Big Setup: Why This Year’s Index Rebalancing Could Fuel a Major Rally

Each January, the Bloomberg Commodity Index (BCOM) and S&P GSCI rebalance their portfolios, forcing large amounts of passive capital to buy or sell futures contracts to match new index weights. Most years, the impact is mild. But for smaller, less liquid markets, these flows can create powerful price moves. This year, cocoa is shaping up to be the standout beneficiary.Chocolate swirls processed cocoa by Jitendrajadhav via iStock