The company is looking to procure cocoa from countries such as Ecuador, Peru and Indonesia and paying premiums to book their beans. — Bloomberg
KUALA LUMPUR: Guan Chong Bhd
, one of the world’s biggest cocoa processors, is scouting for beans worldwide as bad weather and disease pummelling crops in top West African growers send prices to a record.
The company is looking to procure cocoa from countries such as Ecuador, Peru and Indonesia – all minor growers – and paying premiums to book their beans.
That’s due to worries that some sellers in heavyweights like Ivory Coast and Ghana may default on supply contracts.
“Everybody is panicking,” Brandon Tay Hoe Lian, chief executive officer of the firm, said in an interview. Prices are going higher every day, but the beans are not coming, he said.
“We not only have to fight for beans, we’re also paying premiums.”
The world is heading for a third year of supply deficit because of poor harvests in major growers. The shortages, which coincide with rising seasonal demand for chocolate, have sent futures to an all-time high.
Cocoa has seen wild price swings and huge premiums for near-term supplies.
Guan Chong’s factories are still running and it is “comfortably” and “sufficiently” covered for the rest of the year, Tay said. But it’s continuously checking with suppliers to ensure deliveries, and also looking for more beans to avoid situations like contract defaults, he said.
Grinders are forking out huge premiums to secure beans to prevent any plant closures, he said. These spreads are now reaching to about US$400 a tonne in Ecuador and Peru, and at least US$500 in Indonesia. In Ivory Coast, buyers are paying as much as £2,000 extra, he said.
The company sells products like cocoa powder and butter, which give chocolate its smooth taste and texture. But the global shortfalls of beans mean it’s starting to limit sales. — Bloomberg
