Hot Cocoa

Much in the news last week was the last important U. S. commodity market to emerge from Depression doldrums. The New York Cocoa Exchange announced record turnover of 77,558 contracts of 30,000 lb. each during 1936, almost double the figure for 1935. Imports of cocoa beans into the U. S., which drinks or eat as chocolate about 40% of the world supply, were 4,312,518 bags last year compared to 3,883,593 bags in 1935. And after a sharp advance during the last six month; the price of cocoa last week hovered around 12-c- per lb. for the first time in nine years.

For cocoa's rise, as for that of more staple commodities, the obvious and basic explanation is increased consumption. But there have also been special reasons for the hot cocoa market. Unlike rubber and tin (see p. 59) cocoa production is not amenable to cartel agreement. The cocoa tree, which was discovered in Mexico by the Spanish conquistadores, is a sensitive plant, takes from six to eight years of careful tending before it yields a good crop of cocoa beans. In West Africa where one-third of the world's crop is harvested, native growers put in an AAA; of their own in 1930 and 1931. Rather than sell at Depression prices they let hundreds of acres revert to jungle, planted no new trees which would be bearing now.

Result of this lassitude was that after more or less keeping pace with consumption from 1933 through 1935 the production of cocoa in West Africa began to fall off relatively last year. On the British Gold Coast, whose Accra beans make up the largest proportion of the crop, an early season drought deprived trees of needed moisture. Cocoa figures are notoriously hard to get but when harvest time came on the Gold Coast in October, crop estimate for that area dropped from 260,000 ton to 235,000. In Brazil, whose bahia crop is the world's second largest, plantations were kept up better during cocoa's dark days, and total world shipments actually rose from 542,000 tons in 1929 to 675,000 in 1935. Yet so important is the crop of African beans that their sudden scarcity had a decisive effect on the market.

Precisely what the 1936-37 shortage will be is anybody's guess. Natives were still busy in Africa last week harvesting the pods of the cacao tree. Shaped like a football and nearly as big, the yellow or red pods are tossed into heaps by the cutters, who return to slice them open, scoop out the cocoa beans and pile them in boxes or wrappings of plantain leaf for a week's fermentation. They are then dried brown, either in kilns or in the sun, and sacked. Many an Accra tribesman has toted two 60 lb. "headloads" of cocoa beans on a day's trek from plantation to trading post. In New York and London last week cocoa tipsters were freely predicting that when the last beans are sold this spring, cocoa stocks will still be low, cocoa prices even higher.

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