Cocoa beans coming to town, by ton

December 28, 2005|By MEREDITH COHN | MEREDITH COHN,SUN REPORTER

Billions of candy bars stocked on American store shelves could get their start on the docks of Baltimore in the new year.

In May, the port, which has made a business of handling the rolled, the bagged and the bulky, will become an official cocoa port for the New York Board of Trade.

That means thousands of tons of cocoa beans, a key ingredient in chocolate bars, hot chocolate and other sweets, will be stored in warehouses in Baltimore while they await a candy maker or other buyer.

The board is a futures market where investors buy and sell commodities, sometimes many times, and big consumers seek to hedge or lock in prices and to ensure steady product and prices.

Growing competition for space at major ports has the industry seeking a shipping pipeline that can accommodate adequate supplies.

It's not the first traded commodity to find its way to Baltimore harbor. The harbor is a port of entry for metals, including aluminum, copper, lead and zinc, that are traded on another market, the London Metal Exchange.

The storage of such commodities fits in with the overall shift of the centuries-old port to a prime hub for noncontainerized cargo. As goods over the years have increasingly moved overseas in large metal containers, shippers have favored ports closer to the ocean over Baltimore, which requires a day's trip up the Chesapeake Bay.

Baltimore port officials, in turn, sought to capitalize on the port's proximity to Midwest markets, compared with other East Coast ports, and its rail access to receive bulk cargo such as coal, gain and ores. Salt, sugar and spices also have been coming for years. In the 1990s, the port of Baltimore began devoting more space and training to handling awkward and space-consuming cargo, such as automobiles, farm equipment and rolls of paper.

Cocoa is the latest freight.

"Although Baltimore is not yet a major cocoa port, the committee determined it would be useful because facilities exist and because of its proximity to consumption points for cocoa," said Tim Barry, a vice president at the New York Board of Trade. "It's a very viable delivery point."

The port could become a landing point in the future for other board of trade commodities such as coffee, Barry said, if the local officials seek the business.

The beans will go to Locust Point warehouses owned by C. Steinweg (Baltimore) Inc. The company, a global warehousing and distribution company, already got a taste of the beans this year with one 5,000-ton order for a specific customer.

That order alone would make about 933 million standard Hersey milk chocolate bars, assuming that each weighs 1.55 ounces and contains about 11 percent cocoa solids, according to calculations by Robert L. Wolke, professor emeritus of chemistry at the University of Pittsburgh and author of What Einstein Told His Cook 2, The Sequel: Further Adventures in Kitchen Science.

The beans come in 100-pound burlap sacks strapped to wood pallets. The pallets are stacked to the ceiling in neat rows so workers can find the lots they need. Each weighs a slightly different amount, so unlike other materials, specific bags are purchased.

It's cool and dark inside the large warehouse, which has the slight stench of fumigant, ordered by the board to keep out rodents. Imported spices such as pepper and nutmeg cannot be stored here, because of the risk of imbuing the beans with the wrong odor.

It's unclear how many more beans will come to Baltimore, but when they do, they are likely to be diverted from other ports.

Beans have long been shipped to New York and Philadelphia, where the candy bar industry got its start, according to the National Confectioners Association. Both are cocoa ports, as is Hampton Roads, Va.

But shippers have recently begun to fear that those ports are too busy with containers to continue handing the beans, according to Steinweg. Those in the trade asked the company to request cocoa port status, said Rupert Denney, Steinweg's general manager.

The board of trade agreed to allow imports to the port of Baltimore come May because of the potential squeeze elsewhere. The port in Albany, N.Y., also was approved recently by the board for the same reason.

"Our impression is, there is a lack of warehousing capacity on the U.S. East Coast, and the cocoa community doesn't want to be in the situation where a ship arrives and they don't know where to put the beans," Denney said. "We saw an opportunity in Baltimore. It goes back to Baltimore's tradition as a port city. It's a lot closer to some end users. whether they're in Pennsylvania or Illinois."

The beans are in steady supply, after fears subsided that unrest in places such as Ivory Coast would disrupt the flow. About 70 percent of the world production of about 3 million tons comes from Africa, and in 2004 the United States imported $491.5 million worth from there, according to the U.S. Department of Commerce and the International Cocoa Organization.

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