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Cocoa prices edge to 32-year high

Cocoa prices nudged 32-year highs over $3,714 a tonne yesterday after Laurent Gbagbo, the incumbent president, decreed that the state would become the sole purchaser of cocoa in the world’s top grower and handle its export.

Prices have soared since Alassane Ouattara, who the UN judged won November’s presidential election, called for an embargo after Gbagbo refused to relinquish power.

The mechanics of how the state would get the cocoa beans to world markets were not clear. EU ships are banned from Ivorian ports, and most major suppliers have suspended Ivorian exports. The squeeze has meant 475,000 tonnes – over a third of annual output – of unexported cocoa beans are sitting at Ivorian docks.

Kona Haque, a London-based analyst at Australian bank Macquarie, said that even though Ouattara had yet to actually take the reins of the presidency, the cocoa market had sat up and taken note of his decision to halt exports.

“It will definitely have a near-term impact because that means for a month we could see sharply reduced supply from Ivory Coast,” she said.

“Most of the big trading houses and the big cocoa producing companies would probably want to pay attention to what Ouattara said because if Ouattara is going to be president, they don’t want to be on the wrong side of him.”

The analyst said that with the Easter period approaching when demand for chocolate is high, confectioners “will try to buy as much cocoa they can and that will push prices up.

“But other grinders who are already well-covered and anticipated this supply ban, they should be OK.”

Other analysts were less convinced of the effect of the export ban.

Laurent Pipitone, of the International Cocoa Organisation (ICCO), said: “For the time being, (Ouattara’s) order is for a limited period and it is difficult to judge how far this order will be respected.”

Two bodies representing the industry, the Federation of Cocoa Commerce and the European Cocoa Association, have published a joint declaration expressing their concerns, saying the unstable situation in Ivory Coast had created “a very testing environment for the cocoa trade”.

The bodies said they were still seeking “further clarification” of the situation.

Cargill, the US-based agribusiness company that dominates cocoa trading in the Ivory Coast, has “temporarily suspended” cocoa bean purchases, according to a report in Britain’s Financial Times newspaper on Tuesday.

A Cargill spokesman refused to deny or confirm the report.

Another major player, Switzerland-based Barry Callebaut, was similarly cautious, saying it too was “seeking clarification of the situation in cooperation with the relevant industry associations”.

Company spokesman Raphael Wermuth added: “We have bought and exported most of the necessary beans we planned and need for our own processing needs.

“Our factories and stock levels are sufficient to cover all our current needs.” –

Sources: The Independent and Sapa-AFP

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