Algorithms send commodity prices crashing

COCOA, coffee and sugar have plunged in value thanks to robot traders spurred into action by the falling oil price.

The sell-off has seen cocoa crash 10pc in a week – close to a ten-year low – while sugar is at its lowest price for 16 months and coffee has not been cheaper since May 2016.

Baffled industry insiders say the moves have not happened for a concrete reason such as changes in the weather. Experts have instead put the drop down to the rise of trading algorithms which automatically buy and sell goods in response to the market’s activity.

And the oil price appeared to be the trigger. Brent crude dipped below $45 a barrel this week and computer programs may have taken this as a signal to sell commodi- ties across the board. ‘There are definitely products out there which sell all markets linked to oil,’ one analyst said.

‘There’s been a big shift in the power base in the last 12 months – there was previously a balance between hedge funds, traders and algorithms.

‘It means markets can now move very differently to how they did in the past.’