Chocolate Finger: The Man Who Tried to Corner the Cocoa Market

In July 2010, a 50-year-old hedge fund manager quietly bought 240,000 tons of cocoa beans. That was 7% of the entire world’s production. The majority of all available supply on the market. His bet was worth a billion dollars. The press called him “Chocolate Finger.” Chapter 34 of Torsten Dennin’s “From Tulips to Bitcoins” tells the story of Anthony Ward and his massive cocoa gamble.

The Sacred Bean

Before we get to the billion-dollar trade, some history. Cocoa was not always about candy bars and hot chocolate. For the Maya and the Aztecs, cocoa was sacred. They used cocoa beans as actual currency. You could buy things with chocolate. Think about that for a second.

The Aztec king Moctezuma II kept more than 1,200 tons of cocoa in his royal treasury. Not gold. Not jewels. Cocoa beans. That is how valuable this stuff was to the people who first cultivated it.

Fast forward a few hundred years, and cocoa is still extremely important. Just in a different way. Today it is one of the most important cash crops for developing countries. Germany alone eats 9 kilograms of chocolate per person per year. That is a lot of chocolate.

A Concentrated Market

Here is what makes cocoa interesting from a trading perspective. The top ten cocoa-producing countries account for more than 90% of the world’s crop. And one country stands way above the rest: Cote d’Ivoire, also known as Ivory Coast, produces over 33% of all cocoa on the planet.

After Ivory Coast, you have Indonesia, Ghana, Nigeria, Brazil, Cameroon, and a few others. But they are all far behind. When one-third of the world’s supply comes from a single country, you have a fragile market. Anything that goes wrong in Ivory Coast hits the global cocoa price hard.

And things had been going wrong. In the five years leading up to 2010, Ivory Coast’s cocoa production dropped more than 15%. The reasons were not dramatic. No wars or natural disasters. Just poor crop maintenance and pest infestations. The trees were getting old and sick, and nobody was investing enough to fix the problem.

Cocoa trades on two main exchanges. NYBOT in New York and LIFFE in London. Standard contracts are 10 tons each. Not a huge market by oil or gold standards. Which means a big enough buyer can really move prices.

The Cost of Chocolate

Here is a fun fact most people do not know. The actual cocoa in your chocolate bar makes up only about 10% of the production cost. The rest goes to sugar, milk, packaging, marketing, transport, and profit margins. So even when cocoa prices go crazy, your chocolate bar does not get ten times more expensive. But for the traders playing the cocoa market, that 10% is the whole game.

Enter Chocolate Finger

Anthony Ward started trading commodities in 1979. Tea, rice, cocoa, rubber. The man had been in the business for over 30 years by the time the big bet came around. He knew commodity markets inside and out.

In 1998, Ward co-founded Armajaro Trading with Richard Gower. The fund managed about $1.5 billion. But Armajaro was not just a typical trading desk staring at screens in London. They had people on the ground in Cote d’Ivoire, Indonesia, and Ecuador. They had local knowledge. They could see what was happening with the crops before it showed up in market data.

And Ward had done this kind of thing before. Not once. Multiple times.

In 1997, when Ward was working at the Phibro desk at Salomon Smith Barney, his trading position reached 300,000 tons of cocoa. That is enormous. Then in 2002, Ward bought more than 200,000 tons, roughly 5% of the entire world’s cocoa market.

The man had a pattern. He studied the supply situation. He identified when production was falling behind demand. And then he bought big. Very big.

The Billion-Dollar Bet

By 2010, the setup looked perfect for another run. Ivory Coast production was declining. Global demand was steady. Supply was tight.

Cocoa prices had already been climbing. Over the previous two and a half years, they had risen more than 150%. Prices hit levels not seen since 1977. The market was hot.

Then in July 2010, rumors started spreading that Armajaro had placed a massive bet. The numbers were staggering. Ward had bought approximately 240,000 tons of cocoa. That was 7% of global production and the majority of all available supply sitting in exchange warehouses.

By mid-July, cocoa hit $3,600 per ton. The July futures contracts were trading at a $300 premium over December 2010 contracts. That is a 15% backwardation, which in plain language means the market was screaming that cocoa was scarce right now. People needed it today and were willing to pay a big premium over what they expected to pay in six months.

The press had a field day. They called Ward “Willy Wonka” after the chocolate factory owner. And then someone came up with “Chocolate Finger,” a play on the James Bond villain Goldfinger. The name stuck.

The Pushback

Not everyone was impressed. Sixteen companies and trading houses filed complaints with the NYSE and LIFFE, the two exchanges where cocoa trades. They accused Ward of market manipulation. When one buyer controls the majority of available supply, other participants are in trouble. If you need cocoa for your business and one guy is sitting on most of it, you either pay his price or you do not get cocoa.

The exchanges investigated. LIFFE came back and said they did not see indications of market manipulation. Ward was buying cocoa through regular market channels. He was taking physical delivery. Nothing technically wrong with that.

Whether you call it brilliant trading or market manipulation probably depends on which side of the trade you were on. The 16 companies that complained were clearly not happy. Ward and his investors were doing just fine.

It Worked

This is where the story differs from a lot of chapters in this book. In many of these commodity tales, the big bet ends in disaster. The Hunt brothers with silver. Liu Qibing with copper. Amaranth with natural gas. They all blew up.

Chocolate Finger did not blow up. The bet worked. Ward had read the supply situation correctly. Ivory Coast production was genuinely declining. The shortage was real. He bought at the right time, in the right size, and the market moved in his direction.

What Stays With Me

A few things about this story stand out.

First, the repeat offender angle. This was not Ward’s first rodeo. He had done the same play in 1997 and again in 2002. Each time he accumulated a huge position in cocoa. Each time it worked. By 2010, the market knew exactly who was buying and what his strategy was. And he still pulled it off. That tells you something about how concentrated and vulnerable the cocoa market is.

Second, the ground game. Armajaro had people physically present in the countries that grow cocoa. They were not just reading reports from Bloomberg. They could see the aging trees, the pest damage, the declining yields. That local knowledge gave them an edge that pure financial traders simply did not have. In a world where everyone has the same data feeds, actually going to the farms and looking at the crops is a real advantage.

Third, the fragility of these markets. One-third of the world’s cocoa comes from one country. The top ten producers cover 90%+. Cocoa makes up only 10% of chocolate bar cost, so consumers barely notice when prices spike. But for the traders and producers in between, price swings are everything. A market this concentrated is always one bad harvest or one big buyer away from chaos.

And fourth, the line between smart trading and manipulation is genuinely blurry. Ward did his homework. He identified a real supply shortage. He bought a commodity that was actually scarce. Sixteen trading houses said it was manipulation. The exchange said it was fine. Both sides had a point. When you buy enough of something to become the market, you are not just predicting the price. You are setting it.

The Aztecs stored cocoa in royal treasuries because they understood its value. Anthony Ward stored 240,000 tons in exchange warehouses because he understood the exact same thing. Some things do not change in a thousand years. Whoever controls the supply, controls the price.

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