Pierre Andurand on a Shortage of Cocoa, Surging Copper and the Outlook for Oil
How a famous commodities trader forms his trades.
Sacks of raw cocoa beans at a chocolate factory in Paris, France.
Photographer: Cyril Marcilhacy/BloombergPierre Andurand made his name trading oil and other energy-related assets. But wild swings in the price of cocoa have recently lured the founder of Andurand Capital Management into a new market. He bet on cocoa earlier this year and saw the trade pay off as the price of the beans surged to a record $12,000 a ton. Prices have since fallen back to around $7,800, but Andurand sees scope for further upside as extreme deficits in the building blocks of chocolate loom. In this episode we talk about how he entered the cocoa market, how he formed his investment thesis, and potential interest in other soft commodities like coffee and orange juice. We also talk about copper, where a similar story of structural shortages is now playing out in prices. This transcript has been lightly-edited for clarity.
Key insights from the pod:
How Pierre Andurand started trading cocoa — 3:48
Andurand’s cocoa investment thesis — 6:56
How the world could run out of cocoa inventories — 12:23
How to size a position in cocoa futures — 18:35
Who holds stocks of cocoa beans? — 21:36
Coffee, orange juice and other soft commodities — 23:04
Trading cocoa versus grains — 24:26
Why the price of copper “should go up a lot” — 26:27
Forecasts for copper prices over time — 31:04
The oil outlook in a US election year — 35:32