In the ninth episode of the StrongSource Commodity Podcast, we had the privilege of hosting Willem Zimmerman, Vice President of Global Cocoa Trading and Sourcing at Barry Callebaut, the world’s largest chocolate producer. With more than 20 years in the commodity trading industry, Willem brought an invaluable perspective, especially as the cocoa market faces unprecedented challenges.
A Journey from Ivory Coast to Switzerland
Martijn kicked off the episode with a heartfelt introduction, reflecting on his years working alongside Willem at Cargill. “Everyone likes Willem,” Martijn noted, emphasizing the rare blend of likability and intellectual brilliance that Willem brings to the table. From the start, it was clear that Willem’s journey in the commodity industry has been anything but ordinary.
Willem began by recounting how he got his start in the industry, beginning in the coffee markets before transitioning to cocoa. “They sent me to Ivory Coast and told me to return when I understood the value chain,” Willem recalled. This hands-on experience laid the foundation for a career that would see him rise to the top of the global cocoa industry.
The Challenges of Physical Trading
As the conversation moved to the specifics of trading, Willem shared his preference for physical trading over pure futures. “I like the physical part of the business,” he said. “It gives you more opportunities to trade because the complexity increases exponentially as you move through the value chain.” Willem’s deep connection to the tangible aspects of trading shines through, highlighting why he’s been so successful in managing both physical assets and complex futures positions.
Navigating an Evolving Market
In discussing the current state of the cocoa market, Willem didn’t mince words. “Cocoa has been too cheap for too long,” he explained, pointing out the long-term impacts of low prices on investment and sustainability in key producing countries like Ivory Coast and Ghana. The introduction of the European Union Deforestation Regulation (EUDR) has only added to the complexity, making it increasingly challenging for companies to source cocoa responsibly.
Willem also touched on the dynamics of the futures market, particularly the concept of “carry,” which plays a crucial role in cocoa trading. “The price of your beans in the spot month, plus your carry cost to warehouse and finance them to the next period, defines your price,” he explained. This deep dive into market structure provided listeners with a clearer understanding of how cocoa prices are determined and the factors that influence them.
The Rise of Systematic Hedge Funds
The discussion naturally led to the impact of hedge funds on commodity markets. Reflecting on the evolution of hedge funds, Martijn noted the shift from fundamentally driven strategies to those based on large money flows and systematic trading. Willem agreed, acknowledging the double-edged sword that hedge funds represent: “They bring liquidity to the market, but they can also distort it quite a bit.”
This shift has required traders like Willem to adapt their strategies, focusing more on timing and understanding the technical entry points of these funds. It’s a delicate balance between reacting to market moves and sticking to a well-thought-out trading plan.
Leading in Turbulent Times
One of the most valuable insights Willem shared was his approach to leadership, especially during challenging times. He emphasized the importance of creating a “burning platform” to motivate teams and drive action. “You need to make sure people see what they haven’t seen before and that they act upon it,” he said.
Willem’s leadership style is clearly rooted in his deep experience and understanding of the markets, but also in his ability to foster a strong team dynamic. “My joy now comes from looking at my team succeed,” he shared, underscoring the shift from individual performance to team success that comes with experience.
Why Join the Commodity Industry?
As the episode drew to a close, Willem offered compelling reasons why young professionals should consider a career in commodities. “It’s super diverse,” he said. “You get a good view of how the world works, especially in less developed countries, and you’re constantly challenged by incredibly smart and ambitious people.”
Willem’s passion for the industry was evident throughout the conversation, and his closing remarks served as a powerful reminder of the vital role commodities play in the global economy.
Listen to the full episode to gain deeper insights into the current challenges facing the cocoa market and learn from Willem’s extensive experience in global commodity trading:
What is the Strong Source Podcast?
Our mission with the Strong Source podcast is to educate and inform, by creating a community where experts and guests from the entire commodity industry can share their unique perspectives. Martijn Bron, ex-cacao trader, and Alexander Sterk, ex-dairy trader and founder of Vesper, have a deep-passion for this industry, which inspired
