Archive for June, 2010

The History of E.Guittard

Share Button

The Guittard Chocolate Company was founded in San Francisco in 1868 by Etienne Guittard who emigrated from Lyon, France during the California Gold Rush. Guittard is an American-based chocolate maker which produces high-quality couverture chocolate using original formulas and traditional French methods.

Guittard’s cacao varietals:

Guittard’s Growing Regions


Cocoa at 33-Year High as Demand Outstrips Supply

Share Button

The driver of record cocoa prices (Financial Times subscription required) is a classic supply/demand story. It’s also a story of what happens to hedgers and traders when they get caught on the wrong side of a market.

On the supply side, inventories at exchange registered warehouses are at very low levels. The Ivory Coast, which supplies 40% of the world’s cocoa, had a poor crop. The trees are old and disease prone, and without new investment crop production will continue to fall. Consequently, many believe that cocoa demand will outstrip supply for the fifth straight year.

Now enter the hedgers. Hedgers usually sell futures against their crop. Cocoa processors also use hedges to lock in a certain profit. As contracts expire, they usually roll them over into the next forward month. With prices hitting new highs, hedgers must pay the difference to roll their contracts forward, especially if they put the hedge on early. With prices rising, industrial processors also bought call options, which gave them the right to buy cocoa at a given price.

The one thing to remember is that industrial processors must have the product at all costs to stay in business. This was their rationale for buying call options.

Next we have the speculators. Banks love to “sell” call options. In a normal market, options expire to zero. Banks then pocket the premium on their options. However, in a raging bull market, the options keep going up instead of down. This forced banks to hedge their trades by buying futures. Such a move further exacerbated price rises.

Spot cocoa in London hit a high of 2,500 pounds per ton; July cocoa on the futures market traded at 2,558 pounds per ton.

The July spot contract expires July 15. However, even taking into account excess speculation, the supply/demand fundamentals remain intact. Greater demand for chocolate will keep prices firm.

World Cocoa Foundation Launches Cocoa Livelihoods Program in Nigeria

Share Button

Most of the world’s cacao is still grown on small farms that provide many families who are located in remote areas of the world with their economic livelihood. Once cacao is harvested, fermented and dried, farmers have as many as 2-3 weeks (as opposed to one day for limes and such) to get their dried cacao beans to market, via donkey for instance. This means that even a farmer located in a remote village, with few roads or other infrastructure between his family and the nearest town, can make a living by farming cacao.

Five-Year Program to Reach Nearly 30,000 Smallholder Farmers in Nigeria

LAGOS, Nigeria, March 8 /PRNewswire/ — At a ceremony held in Osogbo, Osun State, the World Cocoa Foundation today launched the Cocoa Livelihoods Program (CLP) in Nigeria.  The program initially announced in February 2009, funded by the Bill & Melinda Gates Foundation and 14 chocolate industry companies, is expected to significantly improve the livelihoods of nearly 30,000 cocoa farmers in Nigeria by 2014.

The work in Nigeria is part of a larger five-country program targeting 200,000 cocoa-growing households across Nigeria, Cameroon, Cote d’Ivoire, Ghana, and Liberia.  The program will be active in five states: Abia, Cross River, Edo, Ondo, and Osun. (more…)