I.Coast exporters buying cocoa above fixed price
* Government set port price of 805 CFA francs per kg
* Grinders paying up to 840 CFA francs per kg to ensure supplies
* Exporters fear year-end bean shortage
By Loucoumane Coulibaly
ABIDJAN, Nov 13 (Reuters) - Grinders and major exporters in top cocoa grower Ivory Coast are paying above a government mandated price at the ports to guarantee bean supplies due to speculation of a looming drop in production, exporters said.
The 2012/13 season opened in Ivory Coast on Oct. 3 under a sweeping sector reform aimed at improving farmer incomes by fixing a guaranteed farmgate price of 725 CFA francs ($1.41)per kilogramme of beans, and a port price of 805 CFA/kg.
While the farmgate price appears to be respected, major buyers have begun paying significantly more at the ports.
"Some big exporters are buying at 810 francs, while the grinders are paying from 820 to 840. They're afraid they won't have enough beans to keep running their factories," said the purchase manager for a European export firm based in Abidjan.
"They face big losses if their facilities aren't running."
ICE March cocoa eased $3 or 0.1 percent to $2,454 per tonne early on Thursday after rising to a one-week high of $2,469 on Wednesday following the unexpected dissolution of Ivory Coast's government by President Alassane Ouattara.
Benchmark Liffe March cocoa futures rose 2 pounds or 0.1 percent at 1,594 pounds per tonne.
Cargill, Barry Callebaut, CEMOI and ADM all have local processing units in Ivory Coast, which is both the world's top cocoa producer and the leading grinder, producing mainly cocoa butter and powder.
"It's a fear we'll not be able to meet our end-of-year targets that's pushing us to buy at a higher price in order to collect a maximum of beans," said the purchase manager for an Abidjan-based grinder.
"We have to fill our contracts at all costs," he said, asking not to be named
Ivory Coast this season abolished a 20-year-old subsidy to local grinders under which they benefited from a reduced export tax. Rival exporters said the tax break gave the grinders an unfair advantage when purchasing beans.
"There are multinationals here paying up to 840 francs per kilo here. I don't even know where they're getting all this money," said one manager of an export firm based in the south-western port of San Pedro that does not process its beans domestically.
Ivory Coast produced 1.47 million tonnes of cocoa in the 2011/12 season, down only slightly from a record 2010/11 harvest of over 1.5 million tonnes.
Yet despite early fears that hitches in the application of the reform measures could affect supply flows, Ivory Coast has seen a relatively smooth start to the season.
Port arrivals have averaged around 50,000 tonnes per week for the past two weeks, and total volumes delivered to port are on a par with last season.
However, a farmers strike led to a disruption in supplies and kept arrivals to ports low in the first month and a half of the 2011/12 season.
Deliveries to ports ballooned from mid-November last year with the end of the strike. And many exporters expect production this season to ultimately fall below last season's levels due to a prolonged dry spell early this year.
Broker Marex Spectron on Thursday forecast a global cocoa deficit of 107,000 tonnes in 2012/13 due to a modest rebound in global cocoa bean grindings coupled with a disappointing main crop harvest in West Africa.