Battle Pits Cocoa Speculators Against Chocolate Makers

In recent years, many forces influence cocoa trading prices, including attempts by speculators to corner world markets. “Speculators act as accelerants – and the smaller the market, the easier their game,” report Hauke Goos and Ralf Hoppe for Spiegel Online. Cocoa is among the smallest commodities markets, requiring only £7 billion to buy an entire year's harvest, and a few financiers can manipulate commodity scarcity and profit accordingly. Consumers are a wild card, though, balking at high prices for a non-essential good and quickly finding substitutes. The analysis from Spiegel Online centers on how one trader’s speculation came close to disrupting employment and product quality for a small German chocolate maker in summer of 2010. Chocolate makers and farmers are increasingly wary of becoming targets for speculators. So a few small players team up, engage in direct sales and avoid international trade exchanges that hold such sway over pricing. – YaleGlobal