Ivory Coast’s cocoa industry reform doesn’t present a supply problem for Barry Callebaut AG (BARN), the world’s biggest maker of bulk chocolate, according to Juergen Steinemann, the company’s chief executive officer.
Top cocoa producer Ivory Coast’s industry reforms include a price guarantee to farmers that is 50 percent to 60 percent of international prices. The country also plans to sell 70 percent of the 2012-13 harvest before the season starts in October as part of the proposed changes. The forward sales process started on Jan. 31.
“We do not see a supply problem for us related to this new system,” Steinemann said, commenting on the forward sales, in a media call following the company’s earnings today. “So far prices have been attractive for us.”
The cocoa market has more chance of a surplus than a shortage for this year, Steinemann said. Supplies outpaced demand by 347,000 metric tons last season, data from the International Cocoa Organization in London show.
“The last harvest, especially from the Ivory Coast, was very good, but that had mainly to do with excellent weather,” Steinemann said. “We believe this year’s crop can also be a good crop.”
Cocoa may trade between 1,400 pounds ($2,243) a ton and 1,600 pounds a ton on the NYSE Liffe exchange in London during the next few months, the Zurich-based company said in a statement on its website today.
Cocoa powder prices are “holding quite nicely” and “demand is still there,” Victor Balli, Barry Callebaut’s chief financial officer, said on the call.
“In the coming years we believe that cocoa powder will drive the markets, because the markets for which we use cocoa powder are foreseen to grow faster than the markets for cocoa butter,” Steinemann said.
Sugar prices are expected to remain relatively firm and volatile until the new Brazilian crop enters the market in May, the company said in the statement.
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