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Commodity and Currency




July saw a significant event in that a London Speculator agreed to take a physical delivery of a huge quantity of Cocoa around 240,000 tonnes.

At the time of this report, the terminal price (which was very inflated as this was just before the second position switch) was extremely high at around £2650/2700, hypothetically valuing this stock at £658m. However in real terms, he would have purchased this over a period of time and at much lower levels probably as low as £1600. The fact he has taken delivery is unusual as a speculator will buy and sell, just making paper profits.

The thinking is that by buying such a large quantity of cocoa and effectively taking it out of the market will cause a large deficit in supply and demand and force prices even higher. I actually think he has called this right and will make a handsome, if not reviled, profit a la greedy bankers etc! Anyway, time will tell.

Since the second position switched from September to December, there was an inevitable drop in the price as seen on the graph this because the nearby positions have been trading at unprecedented premiums for the past few weeks.

Other news is that Grind figures for second quarter of 2010 recovered back to the sort of levels seen in 2008, before the economic downturn so arguably consumption returns to normality.




Sterling fell back against the Euro at the beginning of July, but has now recovered back to the 1.21 level. Against the Dollar sterling has continued to strengthen and is beginning to nudge 1.60. This represents a serious improvement in just a few weeks from a low of $1.43.


Tony Mycock 5.7.10

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