(Bloomberg) -- Cocoa futures edged higher in New York in relatively subdued trading as more market watchers say this year’s historic rally has peaked.

Futures rose as much as 2.4% in New York, reversing losses from earlier in the day. Volatility remains high in the market as open interest is low, but the magnitude of price moves has been smaller compared to the swings seen in recent weeks.

Rabobank analyst Paul Joules said in a Friday report that the cocoa rally has peaked, with lower production this season “now fully incorporated in the market price.” However, the world is expected to be in deficit both this year and the following, making prices unlikely to return to “normal” levels quickly.

“A combination of weakening global demand and production responses, particularly from countries without a fixed farmgate price, will help alleviate the pronounced uncertainty baked into current futures pricing,” he said. Still, “it’s likely that inflated cocoa prices will stick around for the next few years.”

Joules sees New York prices easing to an average of $7,000 a metric ton in the fourth quarter. Last week, Citi Research analysts revised their price target for the next three months down to $8,500 a ton, saying that the recent selloff lent more confidence that prices had peaked.

New York futures are currently trading just below $9,000 a ton, after jumping as much as 15% on Tuesday — the biggest intraday move since 1960 — to recover from a steep slide last week. Prices had soared to a record above $11,000 a ton in mid-April on the back of severe shortages.

In the near term, some showers are expected for West African nations like Ivory Coast and Ghana in the next five days, which “would aid some crop growth and could slightly improve soil moisture for some areas,” according to forecaster Maxar Technologies Inc. 

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