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Cocoa set for large-scale buying during index rebalance period

A wave of bullion selling worth more than $10bn is providing the first “big test” of the market in 2026, as last year’s stratospheric run-up in gold and silver prices comes under pressure.

Funds that track commodity indices are rebalancing their holdings and are expected to sell about $6.1bn of silver and $5.6bn of gold during the annual rebalancing window running this year from January 8 to 15, according to calculations from JPMorgan.

“It is the industry’s first big test of how sustainable the December moves are, given we are starting 2026 at such a high base,” said Nicky Shiels, analyst at MKS Pamp.

Benchmark commodity indices such as the Bloomberg Commodity index have to rebalance their weightings once a year to maintain target allocation levels. Funds that track the indices have to buy or sell holdings as a result.

In some years, the market impact is muted but, due to recent big moves in some commodity prices, this year’s rebalancing is expected to have a bigger effect.

This may put pressure on bullion prices but could also provide an opportunity for keen investors to buy the dip — which happened last year, analysts point out. During the 2025 rebalancing window, enforced selling was met with even greater buying, sending prices up.

Gold prices have fallen 0.6 per cent since Tuesday’s close, while silver prices are down more than 4 per cent in the same period.

The yellow metal soared more than 60 per cent in 2025, with silver rising more than 160 per cent.

Gregory Shearer, an analyst at JPMorgan, said silver would see the biggest sales of any commodity during the rebalancing. He estimates net selling of silver equivalent to about 10 per cent of the value of all the open derivatives contracts on trading venue Comex.

Traders are also watching cocoa, which has been re-included in the BCOM. Funds will have to buy a quantity of cocoa equivalent to about 30 per cent of open interest on the Ice exchange in London, according to Kona Haque, head of research at commodity trader ED&F Man.

“This is huge,” she said, adding that the changes helped explain cocoa’s sharp rally in November, when the index announced its inclusion.

Haque said some speculative funds may already have moved ahead of the rebalancing but added that “even then, there should be a decent bullish impact on cocoa prices just on the pure index funds buying”.

“Cocoa people have talked of little else for three months,” said Jonathan Parkman of Marex, adding that there were concerns the rebalancing could prompt short covering of a large speculative position in London.  

Cocoa prices fell nearly 50 per cent in 2025, after a record-breaking rally in 2023 and 2024 driven by supply shortages in West Africa, which grows more than two-thirds of the world’s beans.

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Rokos Capital returned 31% in 2024 following wild swings in equity, bond and commodity markets

Chris Rokos paid himself almost half a billion pounds last year as his macro hedge fund soared in a highly volatile period for markets.

Rokos Capital Management paid £477mn in profits to its highest-paid partner in the year to March 2025, the largest amount since a £509mn payout in 2021, accounts filed to UK Companies House showed.

While the accounts do not disclose the identity of the highest-paid partner, this is widely believed to be Rokos, who is the firm’s founder, majority owner and key risk taker.

Rokos Capital declined to comment.

The hedge fund makes bets on key economic indicators such as inflation and interest rates through asset classes including commodities, equities and bonds.

Chris Rokos is one of the world’s best-known hedge fund traders and a co-founder of macro hedge fund behemoth Brevan Howard.

Rokos Capital was up 21 per cent last year in its lowest-fee share class, according to a person who had seen the numbers, enjoying wild swings in equity, bond and commodity markets that proved the best year for macro hedge funds since 2009.

The fund returned 31 per cent in 2024, which primarily contributed to the profits in this set of accounts, and 8.8 per cent the previous year.

The accounts also showed that revenues more than doubled from £445mn to £1.2bn and that the profit pool available for partners was a record £940mn.

Rokos is the main risk taker at his $22bn hedge fund, supported by analysts and a team of senior investment professionals the firm calls investment officers. This approach is in contrast to most other hedge funds of a similar size, which have multiple key portfolio managers that make trades independently of each other.

After a disastrous 2021 when the fund lost a quarter of its value, performance has radically improved, increasing 51 per cent in 2022, with positive returns every subsequent year.

Other hedge funds, including Caxton and Graham, also enjoyed a strong 2025, as the sector enjoyed winning bets on copper, gold and on a weakening dollar.

Rokos’s old firm Brevan Howard had a mixed year, with its Master fund up an estimated 0.75 per cent and its Alpha Strategies fund up roughly 8 per cent.