Cornering the cocoa market may rob us of much needed moments of pleasure

Martin Vander Weyer’s Any Other Business

A London hedge fund, Armajaro, has cornered the market in cocoa, for which prices have already risen by 150 per cent over two years. Armajaro is reported to have paid £650 million to take delivery of 240,000 tonnes of beans, all the cocoa there is in Europe in fact, and no one seems to know what they plan to do with it — other than reap a huge profit. This is the sort of trade that earned hedge funds a bad name two years ago, when grain and soy prices soared — though investment banks, which regard ‘soft commodities’ as one more asset class for their traders to punt around in, also had a slice of the action. Behind the price peaks in the summer of 2008 were real supply shortages as a result of poor harvests and crop diseases, but the surge was clearly amplified by speculative activity.