Posts Tagged ‘cocoa prices’

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The Man Who Just Bought 7 Percent of the World’s Cocoa

Tuesday, July 20th, 2010

Anthony Ward, founder and CEO of Armajaro who just took delivery of all that cocoa, gave an interview in January that give some insight into why he bought so much cocoa. He is clearly betting on future shortages and hopes to cash in on the likely profits.

On the other hand there are voices that claim Anthony Ward ended holding the bag (or better over 3 million bags of cocoa) after a deal went wrong. Globe and Mail author Paul Waldie claims that Ward ended up on the “wrong side of a private hedging arrangement with Swiss chocolate-maker Barry Callebaut AG.” On Monday, news surfaced that almost half of the cocoa in question had been passed on to Barry Callebaut. Since then, the London price of cocoa has dropped by almost 6 percent.

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A Funny Thing Happened on Thursday

Friday, July 16th, 2010

Futures markets are basically places where people sell things they don’t have to people who don’t want them. In plain English, this means, traders just shuffle papers in the hopes of either averting price risk or making a profit. Positions are squared with opposite positions before the due date and nobody ever has to deal with the messy reality of the actual commodity. Only two percent of futures contracts in cocoa ever result in actual delivery of cocoa.

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European Cocoa Companies Distrust Markets

Friday, July 9th, 2010

LIFFE Traders (BBC Image)

A number of large European Cocoa companies have threatened to move their hedging business from LIFFE (London International Financial Futures and Options Exchange) to ICE (The former New York Board of Trade) unless LIFFE implements controls to limit speculative trades.

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Cocoa Prices – The Continuing Saga

Tuesday, March 9th, 2010

Click for Prices

The roller coaster of cocoa prices continues. Since the December 16 high of $3,636/ton, cocoa prices have dropped by almost $600/ton as measured by the ICCO Daily Price. There hasn’t been much in terms of news that might warrant this decline. Yes, production in the current year is higher than previously expected, but the surplus of 80,000 tons (as predicted by the ICCO according to a Bloomberg article) isn’t very much in light of previous four years of deficits.

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Invisible Hand Is Confused

Friday, February 12th, 2010

The rational way to determine prices

For anyone believing in the power of markets to accurately predict the future, this week was a challenge. On Wednesday, Business Week reported that cocoa prices were dropping on “concerns supply will outpace demand.” Cocoa butter has been piling up in Europe with stocks reaching 50,000 tons. Inventories in NY are rising as well. Finally, a bank projection puts the production of the top three growers (Côte d’Ivoire, Ghana and Indonesia) at 2.59 million tons, about 160,000 tons more than last year. So the speculators got out of the game.

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