“The cocoa industry cannot continue to trade on a futures market that is not offering a minimum of hedge transparency," said the letter seen by Reuters.
"We will, therefore, be obliged to reconsider seriously our hedging policy and with an eventual move towards using the Intercontinental Exchange (ICE) market."
Andreas Christiansen chairman of the German Cocoa Trade Association, one of the signatories to the letter added: "We feel that the London exchange is losing its function as a price-giving market for cocoa for the European market and this will be further lost unless there is major action to steer against this."
Dealers reportedly felt that fund buying had pushed London cocoa futures LCCc2 to a 32-year high of €2,461 last week.
The letter is believed to have asked Liffe to explain why the open position on the Liffe July cocoa futures contract stood at more than 50,000 lots, less than two weeks before the contract's last trading day.
In recent years, high prices for commodities, like cocoa and wheat, have attracted considerable interest from speculators. Tempted by potential gains to be had through the price volatility of the commodity market, investors from outside of the food industry have recently brought "vast amounts of money" to agricommodity markets, says the UN.
Earlier this year, the Association of the German Confectionery Industry (BDSI) said it condemned the speculative investment by banks and funds in agricultural commodities.
“This vice-like movement is putting many confectionery makers under pressure" the BDSI said. "The reason for the cocoa price rise is largely speculation by institutional investors, which have discovered food commodities as a lucrative investment object in the period of financial crisis."