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Commodity and Currency Reports


Cocoa Market
The Cocoa Market continued at high levels into 2009, and then jumped up and over the 2000 mark for the first time for over 20 years. Speculators are still active in the market, which does not help, but there are genuine concerns about the size of the main crop in the Ivory Coast due to low arrival levels at port. Whatever happens, it is unlikely that cocoa prices will drop back to the low 1000's. BC and others are saying that the market is currently over inflated and that in fact within a couple of months we should see a drop back down to the 1600 level or so. We would recommend anyone who buys multi tonnes for manufacturing to consider contracting some forward volume when dips occur. We will be happy to help and advise (for what our view is worth).

Towards the end of 2008 Sterling fell like a stone to almost parity. Once markets returned to normality after the New Year, Sterling recovered to around the Euro1.10 level. Although there is still volatility as pessimistic economic news depresses markets, the general view seems to be that a level of around 1.15 is likely within the coming weeks. With the UK Bank Rate about to drop further to 1% this week, we will see. Again the weakness of sterling is positive for anyone exporting or fighting against imported finished products. Many importers are looking for UK manufacturers to produce products they have been importing up to now.

Unsurprisingly the banks are at it ours (Lloyds TSB) e-mailed this week increasing our interest rate premium over bank base by a further 1.5% as they say their lending margins are being squeezed. After £185bn of our money being put up to support the banks since April, I think this is a bit rich! Needless to say we had a lively conversation about this and agreed a lesser increase figure. Watch out, they are all pushing hard to increase costs of borrowing, but don't tell Gordon he won't believe you....

Tony Mycock 04.02.09


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HB Ingredients
Cocoa House, 22 Bell Lane,Bellbrook Industrial Estate,
Uckfield East Sussex. TN22 1QL.
Tel:+44(0)845 88 00 799 Fax:+44(0)845 88 00 833