Type | Commodity Trade |
---|---|
Industry | financial services |
Founded | May 1998 |
Founder | Anthony Ward Richard Gower |
Headquarters | London |
Armajaro Asset Management is a commodity investment firm based in London. The company specializes within the cocoa and coffee markets, managing investments in soft commodity hedge funds. Armajaro is run by Anthony Ward. [1]
Armajaro also has investments in wine production and wine distribution as well as cocoa processing.
Armajaro employs a full-time meteorologist and has its own weather stations to help anticipate yields of commodities around the world. [2] The firm also has a sizable soft commodity research unit, Armajaro Research Limited, that has over 20 staff globally at country of origin specializing in cocoa and coffee research.
Armajaro Group was founded by Anthony Ward and Richard Gower in May 1998. That November, Armajaro Securities Ltd gained Financial Services Authority authorization. Armajaro, in 2001, acquired a wine producing estate in Paarl, South Africa. The company established subsidiaries in Lagos, Nigeria and Abidjan, Côte d'Ivoire and got into the asset management business in 2002.
Ward, the manager of the CC+ hedge fund, has been dubbed "CHOCFINGER" by fellow traders for his exploits. The nickname is a reference to both the Bond villain Goldfinger as well as a British confection. [3] [4]
In August 2002, Armajaro bought three-quarters of the 204,380 tonnes of cocoa delivered through the Euronext Liffe exchange under futures contracts. The purchase amounted to more than 5 per cent of global cocoa production and produced a £10.4 million pre-tax profit. The price of cocoa soared to a 17-year high of £1554 a tonne and sparked fears of a massive jump in chocolate prices. [3] [5] Ward denied the company was manipulating the market in an effort to drive prices higher amidst the concerns of traders having difficulties fulfilling cocoa obligations. [6]
Armajaro is one of three companies that were banned by the Ghana Cocoa Board from operating on the western border of Ghana after being indicted for facilitating the smuggling of cocoa across Ghana's border with Côte d'Ivoire. [7] Armajaro was barred from trading in 13 districts in western Ghana after a journalist filmed one of its contractors agreeing to smuggle cocoa across the border to Ivory Coast where prices were higher. After the results of an inquiry by the Ghana cocoa board, the ban on Armajaro was lifted in September in all but one district. Bans on two local trading companies, which had been implicated by the same journalist, were also lifted. [8] The case has caused additional scandal after it was revealed that the British Government had lobbied for Armajaro which was also a significant donor to the Conservative party as well as to Andrew Mitchell, the international development secretary who reportedly intervened on Anthony Ward's behalf after receiving £40,000 in donations from the millionaire's company to his parliamentary office. [9]
On 17 July 2010, Armajaro purchased 240,100 tonnes of cocoa. [10] The buyout caused cocoa prices to rise to their highest level since 1977. The purchase was valued at £658 million and accounted for 7 per cent of annual global cocoa production (some sources call this a market corner). [11] While cocoa beans are perishable, they can be held in storage for several years. It was reported that Armajaro sold this batch of cocoa purchase later in the year. [12]
In November 2013, Armajaro announced the sale of its commodity trading division to ECOM Agroindustrial after sustaining losses of $7.5 million in fiscal year 2012, despite $3 billion in revenue. The takeover of Armajaro's coffee, sugar and cocoa business, which was slowly completed globally over 2014, will boost ECOM's presence to compete alongside the largest global commodity firms such as Archer Daniels Midland, Bunge Limited, Cargill and Louis Dreyfus Group, also known as the ABCD. The purchase came in a period of uncertainty for commodities as sugar and coffee futures remained at stagnant lows coupled with tightening margins for cocoa due to slower demand. Armajaro Holdings continued ownership of its commodity focused hedge funds under Armajaro Asset Management LLP. [13] [14]
In August 2011, Armajaro Trading Ltd signed an agreement with the government of St Vincent and the Grenadines aiming to establish a sustainable cocoa industry on the island. [15] Armajaro has set up a subsidiary company in the country – the St Vincent Cocoa Company Ltd. The agreement (until 2061) intends to develop a viable cocoa industry through investment by both parties, with up to 2000 ha planted with cocoa and production between 2500 – 3000 tonnes per year. [16] [17]
Armajaro will provide credit to farmers, build infrastructure and invest in training of farmers, and in return will have exclusive rights to buy, sell and market all cocoa produced in the country. The government will invest in irrigation and road infrastructure, and will grant tax and import exemptions to the company for 15 years. [15]
in July 2014, the company was closed following the sale of Armajaro to Ecom Agrotrade Ltd. In September 2014 a local consortium bought St Vincent Cocoa Company.
A commodity market is a market that trades in the primary economic sector rather than manufactured products, such as cocoa, fruit and sugar. Hard commodities are mined, such as gold and oil. Futures contracts are the oldest way of investing in commodities. Commodity markets can include physical trading and derivatives trading using spot prices, forwards, futures, and options on futures. Farmers have used a simple form of derivative trading in the commodity market for centuries for price risk management.
Fair trade is a term for an arrangement designed to help producers in developing countries achieve sustainable and equitable trade relationships. The fair trade movement combines the payment of higher prices to exporters with improved social and environmental standards. The movement focuses in particular on commodities, or products that are typically exported from developing countries to developed countries but is also used in domestic markets, most notably for handicrafts, coffee, cocoa, wine, sugar, fruit, flowers and gold.
The cocoa bean or simply cocoa, also called cacao, is the dried and fully fermented seed of Theobroma cacao, from which cocoa solids and cocoa butter can be extracted. Cocoa beans native to the Amazon rainforest are the basis of chocolate, and Mesoamerican foods including tejate, an indigenous Mexican drink.
Contango is a situation where the futures price of a commodity is higher than the expected spot price of the contract at maturity. In a contango situation, arbitrageurs or speculators are "willing to pay more [now] for a commodity [to be received] at some point in the future than the actual expected price of the commodity [at that future point]. This may be due to people's desire to pay a premium to have the commodity in the future rather than paying the costs of storage and carry costs of buying the commodity today." On the other side of the trade, hedgers are happy to sell futures contracts and accept the higher-than-expected returns. A contango market is also known as a normal market, or carrying-cost market.
In finance, speculation is the purchase of an asset with the hope that it will become more valuable shortly. It can also refer to short sales in which the speculator hopes for a decline in value.
In finance, a futures contract is a standardized legal contract to buy or sell something at a predetermined price for delivery at a specified time in the future, between parties not yet known to each other. The asset transacted is usually a commodity or financial instrument. The predetermined price of the contract is known as the forward price. The specified time in the future when delivery and payment occur is known as the delivery date. Because it derives its value from the value of the underlying asset, a futures contract is a derivative.
A hedge is an investment position intended to offset potential losses or gains that may be incurred by a companion investment. A hedge can be constructed from many types of financial instruments, including stocks, exchange-traded funds, insurance, forward contracts, swaps, options, gambles, many types of over-the-counter and derivative products, and futures contracts.
In finance, cornering the market consists of obtaining sufficient control of a particular stock, commodity, or other asset in an attempt to manipulate the market price. One definition of cornering a market is "having the greatest market share in a particular industry without having a monopoly".
Cargill, Incorporated, is a privately held American global food corporation based in Minnetonka, Minnesota, and incorporated in Wilmington, Delaware. Founded in 1865, it is the largest privately held corporation in the United States in terms of revenue. Cargill has frequently been the subject of criticism related to the environment, human rights, finance, and other ethical considerations.
Proprietary trading occurs when a trader trades stocks, bonds, currencies, commodities, their derivatives, or other financial instruments with the firm's own money in order to make a profit for itself. Proprietary trading can create potential conflicts of interest such as insider trading and front running.
Global macro is an investment strategy that leverages macroeconomic and geopolitical data to analyze and predict moves in financial markets. Large-scale or "macro" political and economic events can disproportionately impact certain sectors, such as the energy, commodity, and currency markets, over others. The strategy typically employs forecasts and analysis of interest rate trends, international trade and payments, political changes, government policies, international relations, and other broad systemic factors.
Commodities Corporation was a financial services company, based in Princeton, New Jersey that traded actively across various commodities. The firm was noted as one of the leading commodity and futures trading firms. CC is credited for launching the careers of many notable hedge fund investors and for its influence on global macro investing.
UTZ, formerly called UTZ Certified, is a program and a label for sustainable farming. The organization was founded as a non-profit in the Netherlands in 2002. The UTZ label is featured on more than 10,000 product packages in over 116 countries. In 2014, UTZ was reported to be the largest program for sustainable farming of coffee and cocoa in the world. The UTZ program addresses agricultural practices, social and living conditions, farm management, and the environment. In January 2018, UTZ officially merged with the Rainforest Alliance in response to the increasing challenges of deforestation, climate change, systemic poverty, and social inequity.
Vitol is a Swiss-based Dutch multinational energy and commodity trading company that was founded in Rotterdam in 1966 by Henk Viëtor and Jacques Detiger. Though trading, logistics and distribution are at the core of its business, these are complemented by refining, shipping, terminals, exploration and production, power generation, and retail businesses. Vitol has 40 offices worldwide and its largest operations are in Geneva, Houston, London, and Singapore.
Fair trade cocoa is an agricultural product harvested from a cocoa tree using a certified process which is followed by cocoa farmers, buyers, and chocolate manufacturers, and is designed to create sustainable incomes for farmers and their families. Companies that use fair trade certified cocoa to create products can advertise that they are contributing to social, economic, and environmental sustainability in agriculture.
Cocoa is the chief agricultural export of Ghana and Ghana's main cash crop. Ghana is the second largest cocoa exporter in the world, after Ivory Coast. Ghana's cocoa cultivation, however, is noted within the developing world to be one of the most modelled commodities and valuables.
ECOM Agroindustrial is a global commodity trading and processing company based in Switzerland. The company specializes mainly in coffee, cocoa and cotton. ECOM has more than 40 offices located in over 35 countries all around the world. It is the largest coffee millers in the world. 32% of their coffee and 43.7% of their cocoa is sold as sustainable.
LME Copper stands for a group of spot, forward, and futures contracts, trading on the London Metal Exchange (LME), for delivery of Copper, that can be used for price hedging, physical delivery of sales or purchases, investment, and speculation.
LME Nickel stands for a group of spot, forward, and futures contracts, trading on the London Metal Exchange (LME), for delivery of primary Nickel that can be used for price hedging, physical delivery of sales or purchases, investment, and speculation. Producers, semi-fabricators, consumers, recyclers, and merchants can use Nickel futures contracts to hedge Nickel price risks and to reference prices. As of December 31, 2019, LME Nickel is associated with 153,318 tonnes of physical Nickel stored in 500 LME approved warehouses around the world. This is 5.67% of the 2019 global estimated mined Nickel production of 2.7 million tonnes. Despite the low share of physical Nickel associated with LME Nickel contracts, global physical Nickel transactions are usually based on LME Nickel prices. This practice began in the 1970s to 1982, when producer Nickel prices, especially Canadian producer prices collapsed, and the industry switched to LME prices.
LME Zinc stands for a group of spot, forward, and futures contracts, trading on the London Metal Exchange (LME), for delivery of special high-grade Zinc of 99.995% purity minimum that can be used for price hedging, physical delivery of sales or purchases, investment, and speculation. Producers, semi-fabricators, consumers, recyclers, and merchants can use Zinc futures contracts to hedge Zinc price risks and to reference prices.