Cocoa futures

schizo said:
We're talking about SHORT SELLING here, not about closing out your long position. Those dirt poor farmers might be forced to sell their long contracts out of economic necessity. Who knows? They need to send their kids to college or they have unforeseen medical expenses. But they would NEVER sell short knowing that there is an OBVIOUS shortage of crop. Otherwise, they're simply idiots.

Now if you are shorting as a speculator, well, then that would be a whole different matter.
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As I understand it, the article refers to producers SELLING, not SELLING SHORT. They are selling the beans they already have or will soon have. The problem for them is the timing, because they are not allowed to deliver the physical product until the settlement date... meanwhile, they still need to meet margin requirements...

Producers selling on the spot, no problem.

The farmers themselves are never either long nor short, they probably don't even know WTF a futures contract is (in fact, I saw a documentary where most had never tasted chocolate).
 
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(Semafor)


Colombia pushes cacao over coca


Colombia’s government launched a campaign to help coca growers transition to cultivating cacao, as the price of the bean soared to historic highs. Demand for cacao — the source ingredient for chocolate — has jumped as climate change and El Niño, a warm-weather pattern, have disrupted output in West Africa, which typically accounts for 80% of global production. The shortfall has pushed prices to 150% above last year’s levels. Meanwhile a global cocaine glut has sent coca prices crashing. Besides driving economic growth, Colombian producers’ shift to growing cacao could ease violence across South America: A rise in coca production is largely responsible for having turned once-peaceful Ecuador and Perú into some of the most violent countries in the world.
 
SunTrader said:
(Semafor)


Colombia pushes cacao over coca


Colombia’s government launched a campaign to help coca growers transition to cultivating cacao, as the price of the bean soared to historic highs. Demand for cacao — the source ingredient for chocolate — has jumped as climate change and El Niño, a warm-weather pattern, have disrupted output in West Africa, which typically accounts for 80% of global production. The shortfall has pushed prices to 150% above last year’s levels. Meanwhile a global cocaine glut has sent coca prices crashing. Besides driving economic growth, Colombian producers’ shift to growing cacao could ease violence across South America: A rise in coca production is largely responsible for having turned once-peaceful Ecuador and Perú into some of the most violent countries in the world.
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Unfortunately, Ivory Coast cocoa farmers are very poor.
 
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Just a reflexion. The market seems to be pushing up again because of the resilience of grindings, but I am not sure the beans in question have been bought after february. If those are stocks from last year or whatever, of course they will grind them now. And the retail prices of chocolate aren't translating the price hikes at all, even if easter chocolates seemed expensive.
 
Actually, my comment was stupid. If some big chocolate makers have some stocks right now, they should sell it, not grind it when the added value of chocolate is relatively low.
 
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