Speculators a factor in cocoa markets
A funny thing happened to cocoa beans on their way to market; they – along with some other commodities – have become the latest safe haven for investors. During Cargill Cocoa & Chocolate’s presentation on the global cocoa market, which occurred in eight cities throughout the United States and Canada in late January and early February, Philippe Huet, Cargill’s director of cocoa merchandising, pointed out that financial speculators have purchased nearly one million tons of cocoa in recent months. Consequently, farmers wind up selling their crop to non-industry buyers who, depending upon price fluctuation, can hold onto the beans. Five years of low and stable prices had lead to underinvestment by farmers in the cocoa-growing areas. That, coupled with the growing global demand, which increased annual grindings as well as damage from disease, has prevented the rebuilding of cocoa bean stocks and led to another projected deficit. “So, as always in cocoa, the solution is a consistent strong price signal to the farmer,” Huet said. “We will likely see continued elevated price levels and volatility in the coming year.” The same also applies to cocoa butter and cocoa powder, echoed Piet van Amelrooij, Cargill’s director of cocoa powder sales. He noted that it “clearly remains a challenge for the world to build better stocks.” Even the cocoa butter equivalent (CBE) market remains tight as vegetable oils continue to trade at high levels. The short-term consequences suggest continued high prices as a result, van Amelrooij said. Moreover, the current crop of cocoa beans contains less cocoa butter than usual. Long-term, the ongoing slide in equity and credit markets should slow down economic growth, which would lessen price pressures. He also expects the recent imposition of price increases by a host of chocolate manufacturers to dampen consumer demand during this and the coming year. While cocoa powder prices aren’t anywhere near their historical highs, “the world needs more cocoa powder,” van Amelrooij said. “Demand for premium and sophisticated powders is likely increasing faster than demand for basic products. And I expect powder demand will likely outpace butter demand.” During the presentation, van Amelrooij also explained to attendees Cargill’s investments in the Ivory Coast and Ghana aimed at improving farmer access to cocoa bean certification and warehousing facilities. In addition, van Amelrooij detailed the UTZ program that Cargill, UTZ and Solidaridad initiated for a more sustainable cocoa chain. Oxfam Novib supports this initiative. The UTZ cocoa program, which will span over three years, includes developing a code of ethics and good stewardship amongst farmers as well as everyone involved in certifying and transporting beans to market. Once the code has been developed with input from “all stakeholders,” several pilot projects will be implemented to test out the operating principals. The pilot projects will focus on development traceability and chain-of-custody requirements as well as supply creation and producer support. It will also examine market creation and buyer support. The following year will be dedicated to finalizing the code as well as expanding the efforts to other countries. It should also mark the rollout of the group’s first certified crop of cocoa beans. Finally, the company provided details on its latest cocoa processing plant being built in Ghana, a country known for its excellent quality cocoa beans. The facility will have the capacity to grind 140 million lbs. of cocoa annually. It will produce distinctive cocoa powders that will have mild chocolaty flavor profiles. Production is expected to commence late summer, with commercial volumes targeted for 2009.
Annual sweets exhibition returns
Sweet Eurasia, the annual sweet, chocolate, biscuits and confectionery exhibition, held in Istanbul, Turkey, expects to host 300 exhibitors from more than 30 countries. The exhibitors will be searching for clients for private label and contract manufacturing opportunities as well as for their own brand distribution. Istanbul was chosen as the gathering place for this event because of its perfect geographical location, large economy and significant domestic market. This former seat of several empires and gateway to three continents provides a meeting place for such key emerging confectionery markets as the upper Middle East, the Balkans, former CIS countries, Caucasia, Central Asia and North Africa. Sweet Eurasia’s trade-fair concept suits the needs of businesses that deal with the “sweets, chocolate, ice-cream, bakery, snack food & technologies” sectors. The fair runs from 11 a.m. to 7 p.m., June 12 - June 15, 2008 and is located at the Tüyap Exhibition Center in Istanbul, Turkey. Admission is free upon registration. For more information, click www.sweeteurasia.com.
