The Chocolate Hunt
For those who don't know the story...back in 1979/80 ex-oil executive Nelson Bunker Hunt and his brother William Herbert Hunt unsuccessfully attempted to corner the silver market. They spent most of the decade stock piling the precious metal, pushed the price up from $11 to $50 per ounce between September of 1979 and January of 1980...and were effectively broke by March of the same year, when the CFTC let the market crash.
If the story sounds familiar, you have either:
a) looked at Edmundo's avatar lately
b) seen the Wall Street cult classic "Trading Places"
c) both
d) puked when looking at Jamie Lee Curtis' tetas knowing she was born a man, baby.
Sorry, couldn't resist that last one.
News out of London has me thinking that the ghosts of the Hunt brothers and their comedic aliases Randolph and Mortimer Duke are being channeled by
this industrious chap .
Apparently, Mr. Ward's purchase is the biggest in 14 years and the hedge fund he trades for (Armajaro Holdings) is taking delivery of all 241,000 tons of cocoa beans.
Not only is buying over a billion dollars worth of raw chocolate making materials an unlikely play, but it comes on the heels of cocoa prices rising to their highest sale price since 1977. This bit of strategy immediately made me think of
with a visible affection for the delicious treat.
All I can hope for is that this time around, the CFTC has the sense to break up this dangerous game before all the chocolate junkies torch every last grocery store on the planet in search of their fix.
I'm off to hedge my Godiva risk.
The notion might not be a crazy as it sounds at first blush. There have been whispers in the commodities world for more than a decade now that cocoa production is reaching dangerous low levels.
The reason for this is that cocoa is a very fickle plant, and will only grow on the outskirts of rain forests. Deforestation over the past 50 years has cut the number of cocoa plantations and overall production to a fraction of what it was just 20 years ago. I know for a fact this was something that Hershey's was panicking about in the late '90's.
Given a choice between a couple hundred tons of cocoa or a synthetic CDO, my money's on chocolate every time.
For the record, I'd still throw a shot into Jamie Lee Curtis even today.
Hey I'm all for a Grand Duke of Cocoa doling out choco bars and coffee cups by the eye dropper. I'm just curious if it can go down quite like that. I always thought the political instability in Cote d'Ivoire was/is just as much of an issue as the supply levels. Add the whole robusta/arabica issue and I can see why there's panic afoot.
As for Jamie Lee, I gotta take a pass. Just can't go into the unknown, not knowin'...even if I know :D
I think I would pass on Jamie Lee too. As far as the cocoa purchase is concerned, it will be rather interesting to see how this will play out.
Funny story. So I was doing a little research on the topic and one of the comments I read at the bottom of an different article on the same topic was, "Maybe this guy is trying to punish Kraft because they laid off a bunch of people after they purchased Cadbury, which is an English company" or something to that effect, lol. Silly humans.
Regards
LMAO. Yep, quotes like that one make me very proud of not being "normal".
Yeah, only some nut bag would think that someone just dropped $1 billion freaking dollars on cocoa beans to prove a point to someone, or some company rather, that he likely has nothing to do with. Probably that damned Illuminati taking over the world. I wonder when it will be my turn?
Regards
I saw that too. Some people just have no idea.
The Hunts eventually went bankrupt, FWIW.
where is this cocoa residing? most important, when does it expire? that my monkeys...is the true question.
Price of Cocoa has fallen from a bit above 2700GBP to 2319GBP, which is a total 400GBP fall.
Anyone who is longing at 2700 suffered a lot.
@barboon
cocoa has an extremely long shelf life if kept at or slightly below 6.5% moisture, as far as the location of storage, you provide the address I'm coming with the giant roaster and a few milking cows!
@levelworm
you are right, but I don't think Mr. Ward was looking at the short term value, the elements of a corner are beginning to take shape.
Give me 3 1/2 minutes, and I'll make a woman of that Jamie Lee Curtis.
Mods:
Can I have a WSO Blog?
It would be about how fucking awful Midas Mulligan Magoo's Blog is.
Also, Trading Places is not a "Wall Street Cult Classic"
Totally wanna vom
@ Midas Mulligan Magoo
You are correct. Actually I don't believe Mr. Ward suffered much in the fall since his position was built in several years. The huge cocoa stock plus the unbroken upward pattern excites me a lot.
BTW, what can you make out from the volume-spike at 07/19, Monday? http://markets.ft.com/tearsheets/performance.asp?s=1055540&ss=WSODIssue
[quote=levelworm]@ Midas Mulligan Magoo
You are correct. Actually I don't believe Mr. Ward suffered much in the fall since his position was built in several years. The huge cocoa stock plus the unbroken upward pattern excites me a lot.
BTW, what can you make out from the volume-spike at 07/19, Monday? http://markets.ft.com/tearsheets/performance.asp?s=1055540&ss=WSODIssue…]
Eh, trying to figure out volume spikes is on a level of "chartistry" I do not aspire to scale. There's always a multitude of possibilities that you can always regress on later, but by that time it does you no good in figuring out what the next "wave" will be. Just my 2 cents. Generally speaking, volume spikes are always more likely near the open on Mondays and near the close on Fridays. Something like whether your particular market is an auction or not will have an added effect (as will a million other fluctuating variables, i.e. "white noise"). For my money, I chalk it up to the aforementioned factor 9 times out of 10. Hope that helps.
Thanks for the comments. This is my first experince with future markets so I'm just curious.
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