Cocoa purchase raises supply

Olam’s $1.3 billion deal to buy rival Archer Daniels Midland’s cocoa processing business may reduce liquidity in the niche cocoa bean trade, raising concerns about volatile prices and a potential shake-up of customer relationships.
In the biggest deal to roil the cocoa trade in recent years, Olam scooped up a larger rival’s business and catapulted into the top league of cocoa merchants and processors behind Barry Callebaut and Cargill.
For Olam, the reasons are clear: its vast bean sourcing operations stretching from Ivory Coast to Indonesia will feed newly acquired bean processing assets. This gives it more control over prices of beans, the butter that gives chocolate a melt-in-the-mouth taste and the powder that goes into cookies and drinks such as hot cocoa.
For merchants and processors who buy beans from Olam in an already tight-knit market, the reshuffling of the pack is unsettling as it removes a major supplier from the market.