Traders face $1 bln loss on faltering Ghana cocoa supply, sources say
Ghana looks to delay up to half its bean sales to 2025 -sources
Traders forced to liquidate big chunk of short positions
Physical and futures cocoa markets drying up, traders say
Traders seen passing on costs to chocolate makers
By Maytaal Angel and Maxwell Akalaare Adombila
LONDON/ACCRA, July 15 (Reuters) -Trading houses face losses of at least $1 billion on cocoa derivatives after major producer Ghana failed to deliver beans this year, forcing traders to liquidate short positions in a rallying market, six industry sources told Reuters.
Global cocoa prices CCc2 soared this year after bad weather, bean disease, smuggling and illegal gold mining reduced production and the volume of beans available in Ghana, the world's No.2 producer.
Chocolate prices also rose globally and chocolate makers have reduced the size of products such as bars as a result of the huge cocoa price increase.
Ghanaian authorities, who sell all of the country's beans, want to delay delivery of up to 350,000 metric tons this season - nearly half of the cocoa beans they sold - due to Ghana's devastated crop, five sources told Reuters last month. Ghana's cocoa regulator said the country was looking to roll over "some volumes, but not in those quantities".
A delay of 350,000 tons means cocoa traders and processors could face losses of about $4,000 per ton on cocoa futures they had bought to hedge their physical bean purchases, or around $1.4 billion combined, the sources said.
Trade houses like Cargill [RIC:RIC:CARG.UL], Olam OLAG.SI and Barry Callebaut BARN.S use the futures market to hedge or lock in a price for cocoa they have not yet sold on to chocolate makers.
"We're sitting staring at our screens, barely trading," said the head cocoa trader at a global trading house specialising in agricultural commodities, speaking on condition of anonymity because he was not authorised to talk to the media.
He said trading in the global cocoa physical and futures market has just about ground to a halt as a result of the deep losses and uncertainty.
Much of Ghana's cocoa is bought by large, diversified trade houses with deep pockets, including Sucden, Olam, Barry Callebaut BARN.S, Cargill, Touton and Ecom.
Traders typically sign deals to buy beans - like any other commodity - months in advance in the hope of reselling later at a profit. By doing so they take a so called long position in the physical market.
As they wait for the physical commodity to be delivered for weeks or months they need to protect themselves against possible price falls. They typically do this by taking short positions in the futures market to protect against losses on a long position.
Short trading bets on price falls so when the physical commodity arrives, long and short positions cancel each other out, guaranteeing a fixed price.
The strategy unravels, however, if physical delivery - in this case cocoa beans - is delayed in a rallying market.
If this happens, traders are forced to liquidate short positions for the month they had expected the commodity to arrive and take a new short position for the month of a new expected delivery.
Doing so in April 2024 - after the market realised Ghana would delay bean delivery to 2025 - would have been costly, according to the traders.
The six sources said last year traders who bought physical beans for May 2024 delivery would have taken equivalent short positions in May 2024 futures at around $3,000 a ton.
With the market rallying in April 2024, those traders had to liquidate May 2024 shorts - or buy the futures back - at $11,000 a ton, facing losses of $8,000 a ton.
As traders still hope to get the cocoa and need to protect themselves in the physical market, they had to take on new short positions for May 2025 delivery, which in April 2024 traded around $7,000 a ton.
That means that if and when traders get their physical cocoa next May at $3,000 a ton, they will still face an aggregate loss of $4,000 per ton.
The cocoa market is facing a third successive year of deficit and prices CCc2 have roughly doubled this year.
Traders will try to recoup at least some of their losses by charging chocolate makers like Hershey HSY.N and Mondelez MDLZ.O higher prices for products like cocoa powder and butter, said a top trader at a global agri-commodity trade house.
Chocolate firms will likely struggle to pass on these costs to cash-strapped consumers who are already buying less chocolate in response to price rises.
Market liquidity has also decreased because of exchanges asking traders to post more cash as collateral to cover their hedges, one of the traders said. This liquidity crunch has fuelled price fluctuations or volatility, he added.
The collateral, known as a margin call, is set by the futures exchange as a down payment that covers a portion of the potential losses traders might face on their futures position. The higher the futures price, the higher the margin calls.
Graphic showing cocoa futures CCc2 price & market volatility since early 1970s https://tmsnrt.rs/3xvJSjJ
Volume of open cocoa CCc2 contracts https://tmsnrt.rs/4ciQDUZ
Premium for May 2024 versus May 2025 cocoa futures CCc1-CCc6 https://tmsnrt.rs/3zPBMmy
Reporting by Maytaal Angel in London, Maxwell Akalaari Adombile in Accra, and Ange Aboa in Abidjan; Editing by Dmitry Zhdannikov and Emelia Sithole-Matarise
免責聲明: XM Group提供線上交易平台的登入和執行服務，允許個人查看和/或使用網站所提供的內容，但不進行任何更改或擴展其服務和訪問權限，並受以下條款與條例約束：（i）條款與條例；（ii）風險提示；（iii）完全免責聲明。網站內部所提供的所有資訊，僅限於一般資訊用途。請注意，我們所有的線上交易平台內容並不構成，也不被視為進入金融市場交易的邀約或邀請 。金融市場交易會對您的投資帶來重大風險。
所有缐上交易平台所發佈的資料，僅適用於教育/資訊類用途，不包含也不應被視爲適用於金融、投資稅或交易相關諮詢和建議，或是交易價格紀錄，或是任何金融商品或非應邀途徑的金融相關優惠的交易邀約或邀請。
本網站的所有XM和第三方所提供的内容，包括意見、新聞、研究、分析、價格其他資訊和第三方網站鏈接，皆爲‘按原狀’，並作爲一般市場評論所提供，而非投資建議。請理解和接受，所有被歸類為投資研究範圍的相關内容，並非爲了促進投資研究獨立性，而根據法律要求所編寫，而是被視爲符合營銷傳播相關法律與法規所編寫的内容。請確保您已詳讀並完全理解我們的非獨立投資研究提示和風險提示資訊，相關詳情請點擊 這裡查看。
