Cocoa market outlook and strategies for 2011

The way forward in a volotile cocoa market

Cocoa prices have been subject to immense fluctuations. Not only exogenous influences are to be accounted, but so are endogenous factors, in particular the conduct of market players.

In July this year, for instance, the London cocoa futures market attracted vast attention in the media. On one hand a very large premium was received over deferred contracts. On the other hand, 240,100 tons of cocoa (representing 97% of the valid certified cocoa stocks in Europe), were delivered just at expiration date.

Several cocoa associations called this development “a manipulation of the contract”. Not only has the London futures market fallen in disrepute, it also prompted a heated debate over transparency and business conduct.[1. International Cocoa Organization. Cocoa Market Review. July 2010. London. 2010]

Quality and traceability: The Mountains of the Moon™ approach

The question arises how to react to such volatile future perspectives? “Social responsibility, quality and full traceability is our key strategy to differentiate ourselves from such market behaviour and to achieve sustainability” discloses Clemens Fehr, who is managing Mountains of the Moon™ products.

Practically speaking, this means organic and fair trade certification and direct marketing of products via transparent channels. “An additional benefit of this approach is that our business contributes to higher income for farmers and improved social and environmental conditions.” continues Fehr. The strategy helps to create long-term relationships and to detach cocoa from the Mountains of the Moon™ from the volatility of day to day trading, which is to the benefit of all parties involved in this value chain.

“Dual certification combined with high quality is a successful recipe for small-scale producers such as our company.”