Nestle traders bet rising cocoa prices and Ebola fears will hit profits

Maker of KitKat due to report third quarter earnings next week

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The Independent Online

Investors in Nestle are betting that results next week from the maker of KitKat could be hit by the rising costs of making chocolate – cocoa prices have soared 16 per cent in the past 12 months.

Hedge funds are betting that cocoa prices will rise even further and the fear of ebola spreading, from Liberia and Guinea to the world’s top cocoa-bean producer Ivory Coast, could push the price even higher.

Bloomberg reported that hedge funds are betting Nestle’s share price will fall when it releases its results next week.

Options betting on a 10 per cent decline in Nestle shares cost 9.89 points more than calls betting on a 10 per cent gain, according to one-month data compiled by Bloomberg.

 

That’s the largest spread, known as skew, since July 2013. The measure is more than double its six-month average.

First-half sales for the confectionery division at Nestle fell 9.2 per cent to Sfr4.2 billion and its rising production costs are being passed on to consumers – meaning the price of chocolate bars are increasing.

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Nestle will reveal its nine-month sales data on October 16. It declined to comment on the Bloomberg figures.

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