There was lots of excitement in the media over the last week, with cocoa prices briefly hitting a 33-year high after a single buyer cornered the market, purchasing and taking delivery of 240,100 tonnes of cocoa.
That’s £658 million worth of cocoa beans, representing around 7% of the world’s annual production of cocoa, or 15% of current global stocks.
The buyer is a hedge fund called Armajaro Holdings, headed up by multi-millionaire Anthony Ward. The fact that Mr Ward has actually taken delivery of the beans suggests that he is stockpiling them, betting on future cocoa shortages with the hope of selling them on for a whopping profit.
Cocoa prices hit a 24-year high last week, reaching $3,183 per tonne on the New York futures market, now well above the Fairtrade minimum price floor of $1,600 a tonne. Meanwhile the International Cocoa Organisation (ICCO) revised down its forecasted surplus for next year’s harvest from 100,000 tonnes to 25,000-50,000 tonnes.
It seems that demand for cocoa – which took a hit because of the global recession – is picking up again more quickly than expected, even as production is predicted to fall.