Cocoa Gains on Supply Concerns in Ivory Coast; Sugar, Coffee Futures Rise
Cocoa rose to a three-month high in London as processors and exporters in Ivory Coast, the world’s biggest producer, said supplies were disrupted by unrest after a disputed election and the imposition of a curfew.
Work at some plants slowed because employees were sent home for their safety, according to three industry officials in the commercial capital Abidjan, who asked not to be named because they aren’t authorized to speak to the press. The borders were sealed off Dec. 2 and people were reported to have died in clashes in the city since the disputed elections Nov. 28.
“The question for the cocoa industry is whether there will be a physical disruption in the arrival of beans to the ports,” Emmanuel Jayet, head of agricultural commodity research at Societe Generale SA in London, said today by phone. Many of the country’s farmers also may “wait for the situation to stabilize” before delivering the crop, he said.
While cocoa prices declined 9 percent this year in London as traders anticipated more supply, they rallied 9.6 percent in the last week because of unrest in the West African nation. More output in Ghana, Indonesia and Brazil should mean a “modest” surplus this year, limiting the potential impact of the Ivory Coast disruptions, Macquarie Group Ltd. said in a report Dec. 3.
Cocoa for March delivery gained 16 pounds, or 0.8 percent, to 2,061 pounds ($3,252) a metric ton at 12:44 p.m. on NYSE Liffe in London, after earlier today rising 1.8 percent to 2,081 pounds, the highest since Aug. 25. Prices surged 4.5 percent last week, the biggest gain since the week to June 4.
“We continue to harvest the beans and stock them in our warehouse, but we haven’t sold anything since Dec. 3,” Koffi Kanga, secretary-general of a farmer’s cooperative in Gabiadji, a town in the southwest cocoa-growing region of San Pedro, said yesterday by phone. “People are very worried about the political situation.”
Ivory Coast extended a nighttime curfew by a week, the country’s Radiodiffusion Television Ivoirienne reported on its website yesterday. The curfew is from 10 p.m. to 6 a.m. That’s limiting operations at the port of Abidjan, said Pierre Blesson, an official who monitors ship movements at the port. Vessels can come in and out of the port from 8 a.m. to 8 p.m., Blesson said.
“We are continuing to try and operate as close to normal as possible, but we are, like everybody else, experiencing some challenges both in terms of delivery of beans and logistics on the ground,” said Stephen Fairbairn, a spokesman for Cargill Inc. in Cobham, England. The Minnetonka, Minnesota-based company has cocoa production facilities in Ivory Coast, as well as Ghana, the Netherlands, France and Germany.
Barry Callebaut AG, the world’s largest maker of bulk chocolate, said its production in Ivory Coast and exports from the country are unaffected.
“We have taken some precautions in order to ensure the safety of our employees,” Raphael Wermuth, a spokesman for the company in Zurich, said by phone yesterday.
Alassane Ouattara is backed by the United Nations as the winner of the elections. The incumbent, Laurent Gbagbo, was sworn in as president on Dec. 4 after the Constitutional Council rejected the Electoral Commission’s vote count. Hours later, Ouattara said he had taken the oath of office. The European Union and the U.S. have also backed Ouattara.
Ivory Coast has been divided between a rebel-held north and the government-controlled south since an uprising in 2002.
“For the year the crop is excellent and nobody in Ivory Coast has any interest in disrupting the cocoa trade,” Jayet said. “You will have this short-term volatility, but eventually these beans will likely reach the export position.”
Cocoa production may exceed demand by 100,000 tons in the current season as rainfall increases and West African governments invest in the industry, the International Cocoa Organization said Oct. 13. Global output of the beans will be 3.8 million tons, compared with demand of 3.7 million tons, Executive Director Jean-Marc Anga said.
Cocoa for March delivery gained $34, or 1.1 percent, to $3,099 a ton on ICE Futures U.S. in New York. Earlier today the price jumped 2.4 percent to $3,140, the highest since Aug. 6.
In other agricultural markets, white sugar for March delivery climbed 0.7 percent to $748.70 a ton on NYSE Liffe, heading for a fifth session of gains. Raw sugar for March delivery rose 1.7 percent to 29.49 cents a pound in New York.
Robusta coffee for March delivery added $30, or 1.6 percent, to $1,890 a ton on NYSE Liffe, reversing yesterday’s decline. Arabica coffee for March delivery advanced for a fifth session, rising 1.2 percent to $2.1140 a pound in New York.