LONDON (Reuters) - Cocoa is unlikely to flow from top producer Ivory Coast until fighting stops and the banking system is restored, despite the lifting of European Union sanctions on four entities, analysts and traders said on Monday.
The EU lifted sanctions on Friday on Abidjan and San Pedro ports, as well as on the Ivorian Refining Company and the Coffee and Cocoa Trade Management Committee, following a request from presidential claimant Alassane Ouattara.
However, fighting between forces loyal to Ouattara and incumbent Ivory Coast leader Laurent Gbagbo continued in the commercial capital Abidjan.
“The EU statement is a step in the right direction for the cocoa trade, but it is only a step,” said Jonathan Parkman, joint head of agriculture at brokerage Marex Financial.
“Until the situation in Abidjan is calmer, there won’t be the ability to do very much (to restore cocoa trade).”
Parkman added: “I think we need the situation with Gbagbo to be resolved.”
One physical cocoa trader said, “Although the EU may have lifted sanctions, Ouattara’s cocoa export ban remains in force so you still cannot expect a quick flow of export shipments.”
The trader added, the EU’s move was a welcome step toward resuming normal trade patterns in Ivory Coast cocoa, but: “A formal lifting of the export ban is now needed and a stop to fighting.”
U.N. and French helicopters attacked forces loyal to Ivory Coast’s Laurent Gbagbo overnight into Monday, damaging the presidential residence in Abidjan and destroying heavy weapons that U.N. chief Ban Ki-moon ordered silenced.
Gary Mead, an analyst at VM Group, said of the EU sanctions move: “The real question is — what will be the fate of the Ivorian mid crop? All the time fighting and bloodshed and uncertainty continue, that (mid crop) has a shadow hanging over it. Longer term — out to the 2011/12 season — there are even more doubts.”
Ivory Coast’s mid crop harvest starts this month. Many workers have fled plantations due to violence in the country.
A senior London-based cocoa futures dealer said cocoa was not likely to start flowing again out of Ivory Coast while fighting continued.
“When you’ve got bullets flying around, no one will want to truck cocoa,” the dealer said.
The resumption of cocoa trade would also depend on restoring the crippled banking system in Ivory Coast.
“Without the banking system, it’s hard to see how trade will resume,” Parkman said.
ICE cocoa futures edged up in early trade on Monday, underscoring fears over the near term supply outlook.
ICE second-month, July cocoa extended gains, standing up $53 or 1.8 percent to $3,038 per metric ton at 0908 GMT, below the 32-year high of $3,775 per metric ton touched on March 4.
Additional reporting by Michael Hogan; editing by Keiron Henderson