Callebaut Expects Higher Cocoa Prices as Hedge Funds Speculate

Date: Tuesday, February 2, 2010
Author: Holger Elfes, Bloomberg

Barry Callebaut AG, the world’s largest maker of bulk chocolate, expects prices for cocoa beans to increase, after surging more than 20 percent last year, as hedge funds cause disruption in the market.

“There is a bigger chance that cocoa prices will further rise than that they will fall,” Chief Executive Officer Juergen Steinemann said in an interview at the International Sweets and Biscuits Fair in Cologne, the world’s largest confectionery trade show.

Cocoa futures jumped to a 21-year high in London in January and to a 30-year high in New York on optimism that a global economic recovery will buoy demand. Cocoa has risen in the past year on speculation that supplies will tighten from West Africa, the world’s most-productive region for the beans.

“Hedge funds have been intervening in the cocoa market in the past six months,” Steinemann said. “They don’t belong there, and the chocolate customer has to pay the price.”

Barry Callebaut, based in Zurich, can’t postpone the purchase of cocoa beans because volumes available on the market won’t increase, Steinemann said.

“We expect the chocolate market to return to its former growth rates of 2 percent to 3 percent per annum in volume terms in about 2 years,” the CEO said. Global chocolate sales will be stable in 2010 after declining 2.6 percent by volume last year, the first drop in a decade, Steinemann said.

A fire in one of Barry Callebaut’s warehouses in Ivory Coast last week will neither influence cocoa prices nor the company’s business, Steinemann said.

“Less than 5,000 tons of products were destroyed by the fire, and not 15,000 tons as reported by some media,” Steinemann said.

Kraft Food Inc.’s acquisition of Cadbury Plc won’t have any influence on cocoa prices, the CEO said.

To contact the reporter on this story: Holger Elfes in Dusseldorf at helfes@bloomberg.net.