Cocoa Price Rise In Ivory Coast, Fuels Supply Concerns

Cocoa Price Rise In Ivory Coast, Fuels Supply Concerns

From Business Recorder

Concern that Ivory Coast’s main crop cocoa harvest could tail off early provoking a supply crunch has fueled strong competition among major grinders and pushed up port and farmer prices in the world’s top grower. Ivory Coast’s 2013/14 cocoa season, its second under a sweeping reform of the sector, opened on October 2 with the government fixing a guaranteed minimum farmgate price of 750 CFA francs ($1.54) per kg for the October-to-March main crop.

It also imposed limits on the price exporters can pay for beans in an effort to stop smaller players from being squeezed out of the market. Exporters with local processing facilities told Reuters they were paying 845 CFA/kg – the maximum price allowed for beans entering the country’s two ports – in order to secure volumes.

“We’re at the beginning of the season, and we need to be sure of having beans to supply our factories and honour our contracts,” a purchases manager for one of the grinders said, asking not to be named. Ivory Coast’s grinders include Cargill, Barry Callebaut, CEMOI and ADM, some of the industry’s biggest players.

Bean exporters were also seeking to secure supplies of early-season, high quality beans amid worries that poor weather could cause output to drop off towards the end of the year, but most said they were unable to match the prices set by grinders. “There was a two-month cool stint in July and August that will impact production,” one exporter said. “If the dry season due to begin in mid-November is harsh, there will be little cocoa from January. The exporters are anticipating and will buy a maximum of beans through December,” he said.

Indications of growing demand and expectations of a global supply deficit have pushed up world cocoa prices in recent weeks. ICE December cocoa was down $12 or 0.4 percent at $2,748 per ton at 1115 GMT, a two-year peak of $2,770. March cocoa on Liffe was down 10 pounds or 0.6 percent at 1,759 pounds a ton, having  touched a two-year high of 1,774 pounds a ton.

Read more at Business Recorder.