The reported purchase of 240,100 tonnes of cocoa on the London futures market by a sole trader will not impact hugely on supply to industry, as cocoa processors have already shored up bean stocks for the next four months, claims the International Cocoa Organisation (ICCO).
The receipt of this tonnage by the Armajaro group, unconfirmed as yet by the leading cocoa supplier and European Cocoa Association (ECA) member, represents around 15 per cent of global stocks and 25 per cent of estimated European stocks, with about one third of all cocoa available to European firms traded on London’s Liffe exchange, according to the ICCO.
The deal is said to be worth close to a $1bn, with media reports claiming that 100,000 tonnes of this shipment have already been bought by industrial chocolate producer, Barry Callebaut.
ICCO senior statistician Laurent Pipitone told ConfectioneryNews.com that the purchase of 214,100 tonnes by one trader was a ‘significant amount of cocoa’ and that it was questionable that a supplier of the commodity would take delivery of that amount of cocoa only to fulfil its contracts.
“Maybe they will use the asset power to their advantage in the coming months," he continued.
Liffe, though, in a letter to cocoa processors who had protested about speculation in the commodity on the London market last month, reported that it saw no evidence of any market participant trading with the specific purpose of distorting the price of the July delivery, according to Reuters.
ICCO's Pipitone argues that the next crop output from top cocoa producer, the Ivory Coast, will have more influence on cocoa supply than the Armajaro purchase, and, in fact, should alleviate recent supply pressures.
“All signs are that Ivory Coast cocoa supplies will recover from this season’s deficit situation, and while a clearer picture on this will only be available in January 2011, a surplus is expected,” said Pipitone.
In fact, ICOO director Jan Vingerhoets told Bloomberg last week that cocoa production in the Ivory Coast will rise to 1.3 million metric tons in the year through September 2011 as higher prices prompt growers to invest in their farms.
Signs of recovery in the global chocolate market have been supported by the hike, reported this month, in both US and European cocoa grinding levels, which are an indicator of demand from industry.
And Barry Callebaut along with leading chocolate brand manufacturers such as Hershey, Nestle and Lindt have been reporting positive growth outlooks for the category in recent financial statements.