The Final Proof: June 2012

The world of cocoa and its commodity futures felt a wave of disquiet in April.

The world of cocoa and its commodity futures felt a wave of disquiet in April. Johannes Kilian, one of its most influential players and cocoa-pod counter for the last 20 years, retired at 75.

As a job description, cocoa-pod counter is as analog as it gets. But when you think about commodity futures, you can’t help picturing someone in business attire sitting on the phone in front of a screen of flashing numbers.

That was Kilian for the 30 years before he decided to do field work. He even co-founded a commodity corporation that later became a global leader in hedge fund trading.

Kilian worked in Ivory Coast, Ghana and Brazil, the world’s top three cocoa producers. In the field, scanning cocoa trees, leaning his head back to peer up into the sun, Kilian – and the many native teams of counters he trained himself – gathered real information that led to better crop and price forecasting. He is an inspired reminder that live bodies are gathering real data on the ground, often where governments can’t because they lack the resources.

Kilian was the single most famous set of boots in cocoa because he was peerless in how far he was prepared to travel inland, despite the dangers of war. No one was as influential or as unassailable.

As one of his New York clients told Reuters: “Being an independent force, Hans [his nickname] went where his spirit took him. I would say he’s the only known independent pod counter in the world, certainly the most celebrated.”

Kilian is thought to have had 11 to 20 clients, among them manufacturers, dealers and commodity funds. And he did more than count. He reported on economic and political conditions, current events, prices and labour.

A side note to what else is impacting the world trade in cocoa today (aside from finding a worthy replacement for Kilian) is the Ivory Coast’s new cocoa reform package tied to an International Monetary Fund debt-relief accord. The package was launched last November and is intended to get better prices for farmers, to increase production, to refurbish plantations, and to help the country repay debt accumulated during the war years.

World chocolate leader Barry Callebaut AG made a point of announcing that they would co-operate with the reform package because many exporters and importers had initially opposed the package and boycotted auctions, adding they believed there would be a comfortable surplus of cocoa this year, putting prices in a similarly comfortable position.

Callebault’s CEO Juergen Steinemann said as much when interviewed by the Bloomberg news service. The same report quoted a statement by London’s International Cocoa Organization, claiming that the supply of cocoa surpassed demand by 347,000 metric tonnes last season.

Still, in the end, it is only after the cocoa is harvested, and if the weather complies, and the price of gas co-operates, and the shipments are safely received at dock, delivered to the manufacturer and turned into chocolate blocks or pellets, and that invoice lands on your bookkeeper’s desk, that you can you know your real costs.

Your wholesalers may not give you a heads-up. I spoke to a couple of national distributors, but they were not forthcoming about how they handle passing on changes in commodity pricing.

And who wants to study futures markets? Well, actually, I like to. The fact that everything we make depends on what happens thousands of miles away, under conditions I can only imagine, is a constant fascination for me. I go here: http://www.indexmundi.com/commodities/?commodity=cocoa-beans&months=60 .

This page will show you what cocoa did over the last 12 months.

To give this data meaning, you might want to look at what you paid for couverture in March and December of 2011. You should have seen a drop of 35 per cent, because that’s what happened on the commodity market. Cocoa went from US$3,393 per metric tonne to US$2,200.

The site also gives you a look at other commodities significant to your business, like wheat, sugar, vegetable oil and crude oil. It’s extremely easy to use. You can click on the six-month link to look back over six months. You can do a five-year view. They provide an easy-to-read chart, but also actual figures. And information is posted regularly and promptly. It’s a non-partisan source of actual data, which is gold when it comes to an area where so many statements or pronouncements are based on intangibles – unless you were one of Kilian’s clients.

Heads up on another crucial ingredient of the coming months: vanilla is in trouble. A shortage is looming. Ask your supplier about it, and insist on a response. You’re entitled. Your business has tremendous value to them, and to you.

Stephanie Ortenzi (www.pistachiowriting.com ) is a Toronto-based food marketing writer.