One man's cocoa binge

A hedge fund manager in London is buying huge amounts of cocoa -- and driving up prices.

By Kim Peterson Jul 26, 2010 2:52PM
Chocolate  © image100/CorbisAnthony Ward is cuckoo for cocoa -- and his recent binge could cause the price of chocolate to go up.

Ward is a hedge fund manager in London, and he's bought up so much cocoa that he has all but cornered the market, The New York Times reports. Some experts say he's sitting on the equivalent of 5 billion chocolate bars.

Ward isn't buying because of a massive sweet tooth. Critics say he's hoarding cocoa to drive up prices -- and already cocoa prices in London are at a 30-year high. That could have an impact on Hershey (HSY) and Kraft (KFT), which now owns Cadbury.

Amazing that one man can change the business of a worldwide commodity. "Through his private investment firm, Armajaro, he now controls a cache equal to 7 percent of annual cocoa production worldwide, a big enough chunk to sway prices," the Times reports.

Ward, who has been named "Chocolate Finger" in the British press, shows no signs of slowing his buying spree. He bought 241,100 metric tons of cocoa beans just this month.

He's jumping in at a good time, too. The annual cocoa harvest starts in October, the Times reports. So from now until then, Ward will be the man with the cocoa -- and will have significant power over prices and supply levels.

Ward has orchestrated a cocoa squeeze before. In 2002, he profited handsomely from a similar move.

Some of the best dark chocolate, such as the Lindt Excellence 70%, has at least 70% cocoa in it. But other mass-produced chocolate bars have less than 10% cocoa, and probably won't feel the hit from Ward's cocoa moves. Hershey's has even started replacing the cocoa butter in its chocolate bars with vegetable oil.

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