Cocoa Doesn't Like Conflict In Ivory Coast (But Armajaro Anthony Ward Does) | MartinKronicle - Michael Martin
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Cocoa Doesn’t Like Conflict In Ivory Coast (But Armajaro Anthony Ward Probably Does)

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The March Cocoa seems to not like any unrest in the Ivory Coast, The Guardian reported today. My guess is that Anthony Ward, the guy to took delivery of the giant cocoa position likes it a lot.

You can say what you want about the US, the President, Tim, and Ben, but one thing is for sure: political stability counts for something in the commodities markets.

The March contract surged 130 points on the day, or $1,300 per contract on fears that unrest will lead to a disruption in supply. If supply is tightened, higher prices can follow. West Africa provides about 80% of the world’s cocoa, and the Ivory Coast providing 50% of the world’s supply. That’s a giant number.

There are no daily limits in Cocoa (there used to be, but not anymore). I have traded tons and tons of cocoa over my career. This is not a contract that you want to get drawn into with fully understanding the risks involved. I have lived through the “Unrest in West Africa” headlines before, and most of the time, some French troops come in and things settle down, as do the cocoa prices.

Cocoa can be illiquid at times, and then flush with trading volume. When I trade cocoa, I expect massive amounts of slippage and skid on my fills, and I have traders who each have over 20 years of execution skills behind them.

BE CAREFUL. If you feel the bull move is upon us, with or without the news from West Africa, you might consider vertical call option spreads or long calls to minimize your losses if the contract does an about-face.

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  • Manuelbravochico

    The large trend following cta’s are being forced to buy at this point. That should provide some support barring any fresh news.
    I don’t trade Cocoa, though I follow it. {not to mention make real hot cocoa from Holland. I don’t use sugar. Instead I use South African cocoa which is sweeter , to sweeten. And yes, I get a small rush of dopamine from drinking real cocoa.}

  • Anonymous

    funny, I don’t recall getting invited…

  • Agence

    I thought Ward traded out months ago? Strange, considering he had some political clout there and should have seen this coming. Maybe the real money was in his hedges.

  • Anonymous

    I don’t think anyone can say for sure what his net exposure was.