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Change in commodity futures prices YTD May 8, 2020: Cocoa (-4.8%); Wheat (+3.7%); Maize (-17.5%); ICE Natural gas (-55%); Gold (+12.1%); Soyabeans (-23.1%); Cotton (-18.2%); Rough rice (+27.2%); Platinum (-18.5%); Arabica coffee (-15.1%); Brent crude oil (-53.3%); Copper (-14.6%); Sugar (-23.3%);     Whilst Africa's growth in 2020 could fall to its lowest since the 2008/9 global financial crisis, the asymmetric nature of shocks facing the region, coupled with increasing investment and cross-border trade, should help the region recover speedily.

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July 24, 2021

From Noha Nyamedjo and Transmar to Itochu: An unrelenting cocoa market exposes trader’s soft underbelly


chocolate-1934_640Franc view: Cocoa’s implacable market has claimed a scalp in the name of Japanese trader Itochu Corp, via its partnership with the Transmar Group. Transmar currently faces a precarious financial situation which could impact its other investments along the West African cocoa belt, most recently the cocoa processing unit in Douala, Cameroon – Noha Nyamedjo & Transmar SA.

Backing out
Itochu, one of Japan’s largest trading groups, is exiting its cocoa venture with the Transmar Group, a family-owned cocoa trader and processor, entered into in 2016. This, after suffering losses on its investments in the 4th quarter of 2016. This period coincides with the start of the cocoa season in West Africa which has seen a precipitous decline in cocoa futures.

Transmar’s cocoa operations have been hard hit by ‘unfavourable’ cocoa markets (via its German supplier Euromar) and fluctuations in the British pound, in which most cocoa contracts are traded. The JV – Transmar Group Ltd –  was UK based and controlled the bulk of the company’s global cocoa operations.

FrancTrade.com understands that these losses are partly related to suboptimal hedging decisions in the derivatives market.

Bankruptcy, insolvency
Transmar’s US unit has since filed for bankruptcy following a declaration of insolvency by the group’s European division in December 2016.

That said, Itochu intends to continue with the cocoa business through other channels as it strategically eyes rising chocolate demand in Asia.

Franc market roundup: Cocoa was unable to hang on to marginal gains over the course of the week ending February 3 with prices closing nearly 4% below their highs at USD 2072 per tonne. The market has been battered by weak fundamentals and souring investor sentiment. According to the US CFTC, as of January 31, large investors cut their long positions in cocoa to the lowest in five years as they opted for better supported markets like cotton. This in itself could trigger some opportunistic buying.

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