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Ivory Coast cocoa prices up on competition, supply concerns
October 16, 2013 / 3:18 PM / 4 years ago

Ivory Coast cocoa prices up on competition, supply concerns

* Industry fears supply crunch due to poor weather

* Grinders, exporters racing to secure supplies

By Loucoumane Coulibaly

ABIDJAN, Oct 16 (Reuters) - Concern that Ivory Coast’s main crop cocoa harvest could tail off early provoking a supply crunch has fuelled 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 Oct. 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 tonne at 1115 GMT, near Tuesday’s two-year peak of $2,770. March cocoa on Liffe was down 10 pounds or 0.6 percent at 1,759 pounds a tonne, having on Tuesday touched a two-year high of 1,774 pounds a tonne.

Farmers said the rush to secure supplies was in many cases leading buyers to pay above the government guaranteed minimum farmgate price of 750 CFA/kg.

In the coastal region of San Pedro, farmers said farmgate prices ranged between 750 CFA francs and 760 last week from 750 CFA francs the previous week.

“The buyers don’t even negotiate. They immediately take anything that is dry,” said Labbe Zoungrana, who farms near San Pedro.

In the centre-western region of Daloa, farmers said they were receiving between 750 CFA francs and 800 CFA francs, while in the western region of Soubre farmers said prices were between 750 and 780 CFA francs.

$1 = 485.7680 CFA francs Editing by Joe Bavier and James Jukwey

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