Ivory Coast Seeks to Ease Cocoa Backlogs as Price Slump Deepensby , , and
Cocoa farmers threaten to go on strike over payments
Ivorian cocoa shippers said unable to honor 80% of contracts
Ivory Coast’s cocoa regulator said it was taking steps to alleviate shipping backlogs and the underpayment of farmers after producers threatened to strike in the world’s biggest producer. Prices fell to the lowest in more than three years.
Authorities are prioritizing the boarding of cocoa at the West African nation’s biggest ports to clear a delay in shipments, the regulator known as Le Conseil du Cafe-Cacao, or CCC, said in a statement published in L’Inter newspaper on Monday. The regulator is also speeding up support payments made to exporters to encourage cocoa purchases while cracking down on buyers who don’t respect the guaranteed farmgate price of 1,100 CFA francs ($1.77) per kilogram, it said.
Beans have been piling up at ports and warehouses after a plunge of more than a third in future prices since July prompted some exporters to suspend purchases. Farmers’ associations representing 98,000 cocoa producers are threatening to strike as the backlogs and price slump means some producers are not receiving the certified amount.
The measures to alleviate the backlogs “have seen an improvement in the situation since January,” the CCC said. “This is seen in an increase in purchases of cocoa from the fields and a significant improvement in exports.”
Prices fell for a sixth day on Monday after local cocoa shippers in the country said more than 80 percent of the contracts they bought cannot be fulfilled after wrongly speculating that prices would rise, according to a person familiar with the matter.
Local exporters have told the CCC that they can’t honor commercial agreements for about 350,000 metric tons of beans, said the person, who asked not to be identified because the information is confidential. After prices plunged, exporters can only ship about 50,000 tons, said the person.
Cocoa futures for March delivery fell 1.5 percent to 1,574 pounds ($1,968) a ton in London. They are trading at the lowest level since August 2013 for a most-active contract.
“There is a problem in Ivory Coast and there is pressure on the price,” Michael Donovan, a broker at Sucden Financial Ltd. in London, said by phone. “People are still looking for lower levels” for prices.
Ivory Coast usually sells 80 percent of the bigger of two annual crops before the season starts in October. Local exporters that bought cocoa while betting on higher prices are now facing massive losses, prompting some of them to default on deals.
The defaults have meant that the regulator already had to re-auction 180,000 tons of cocoa, the person said.