Making cocoa and chocolate a less risky business

Small price changes make a big impact

May 11, 2016

When buying ingredients, we realize that even small price changes can make a significant difference to the bottom line. Whatever decision you make – buy or hold – you are exposed to risk.

If you decide to buy too early and the market drops, that can affect your ability to compete. The same is true if you don’t buy enough and prices increase afterwards. That is why Cargill Cocoa & Chocolate offers expertise in mitigating and diversifying risk by providing protection against higher prices while ensuring you can obtain better price levels. With our offerings we aim to help you protect your business margins, budgets and profitability.

Our wide network to analyze risk

Mitigating commodity risks requires a full understanding of risk factors and the ability to react quickly to them. Experience tells us how fast a situation in raw materials can change. For example, in the coffee market in February 2014, coffee prices almost doubled in one month due to dry weather in Brazil.

At Cargill Cocoa & Chocolate we continuously monitor key risk factors. For cocoa, for example, we analyze a wide variety of fundamentals and make supply and demand projections relating to climate patterns, macroeconomic developments, crop trends, demand expectations and more. To help us, we have ‘boots on the ground’ in major producing regions, including Ivory Coast and Ghana, where we have commercial teams, pod counters, weather analysts and Cargill factories.

Minimizing risk

Our risk mitigation approach involves the creation of financial risk management solutions tailored to the needs of the business. It minimizes exposure to unwanted risks while still allowing the business to profit.

Being part of the wider Cargill network also allows us to look at solutions spanning the full range of commodities, from sugar to cotton and biofuels. This opens the possibility of savings through economies of scale.

Success through saving you money

Ultimately, success for us means supporting you as a customer to make the best possible trading decisions. “You could be the best manufacturer in the world, but if you cannot buy ingredients well, you will lose money,” says Barry Maas, Senior Risk Manager of Cargill Cocoa & Chocolate. “That is why risk management at Cargill is our second nature. It is about delivering for our customers.”

To find out more about our risk management solutions and how we can help you to achieve your goals, please contact your Sales Manager.