* Government set port price of 805 CFA francs per kg
* Grinders paying up to 840 CFA francs per kg to ensure
* Exporters fear year-end bean shortage
By Loucoumane Coulibaly
ABIDJAN, Nov 13 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
"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
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.