A London hedge fund has swept up a large chunk of the world’s stocks of cocoa beans, helping to drive prices of the basic ingredient of chocolate to their highest level in 33 years.
Traders said that Armajaro, which runs several commodities funds, took delivery on Friday of 240,100 tonnes of cocoa, the biggest delivery from London’s Liffe exchange since 1996 and equal to about 7 per cent of annual global production.
Armajaro’s bold bet on higher prices comes as cocoa prices have risen 150 per cent over the past two-and-a-half years, prompting recession-hit chocolate makers to reduce the size of their bars and increase prices.
The hedge fund gained control of the beans by buying July cocoa futures and holding them until their expiry on Thursday.
If the gains continue, then chocolate lovers could feel the crunch.
“Almost all chocolate companies have increased their prices in the past two years,” said Laurent Pipitone of the International Cocoa Organisation.
But he said the latest rises would have to be sustained into next year before chocolate companies were likely to pass on those increases.
Anthony Ward, one of Armajaro’s founders and the manager of its flagship fund, is well-known in the cocoa market for his bullish views.
He has long warned of production problems in Ivory Coast, which grows 40 per cent of the world’s cocoa, and bet successfully on rising prices during previous rallies.
Cocoa output has fallen short of consumption for four years in a row, a run of shortages not seen since the 1960s.
Figures published on Thursday showed that North American cocoa processing increased 12 per cent in the second quarter from a year earlier.
Low inventories could drive prices higher if demand remains strong. Cocoa hit a high of £2,732 a tonne this week and some dealers say it could now top £3,000 a tonne. “It reminds us of 1976,” said one senior cocoa trader. In 1977 prices spiked above £3,300.
Armajaro appears to believe that the market is going to spike significantly higher by September, traditionally the tightest period of the year as chocolatiers ramp up production ahead of Christmas and the main West African crop has not yet come to market.
Although stocks of cocoa exist in warehouses not registered on any exchange, the delivery to Armajaro represents almost all the 270,000 tonnes of available stocks at Liffe-registered warehouses.
“The question is: what happens to those stocks?” said another trader.
“Are they going to be marketed? If not, it becomes terrifyingly bullish.”
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Bron: http://www.ft.com/cms/s/0/e50feefc-9120-11df-b297-00144feab49a.html
Oud grondstoffenhandelaar en medeoprichter van Armajaro, Anthony Ward, heeft al de nodige ervaring met de handel in cacoa. Hij heeft al een keer een soortgelijke trade uitgevoerd in 2002 waarbij hij 40 miljoen pond verdiende in 2 maanden.
Mijn visie op de AEX is dat deze niet meer onder de 300 zal raken en dat we al dan niet langzaam zullen gaan herstellen. De euro zal ook in deze beweging meegaan.
Paul van Gompel
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