Cocoa surges as Ivory Coast crisis deepens

The crisis, after a contested presidential election, has started to affect the physical flow of cocoa beans, with exporters in Abidjan, the country’s commercial capital, running low because of insecurity.

Laurent Gbagbo overturned Ivory Coast’s election results last week and installed himself for a further term as president after the constitutional court – run by an ally – alleged widespread rigging and annulled the results that showed he had been defeated by his arch-rival Alassane Ouattara.

Both men were sworn in as president on Saturday, raising the spectre of an ethnic split in a country that has been divided since a 2002-03 civil war left much of the north in rebel hands.

“We have an untenable situation with two presidents and two governments running the country,” said the head of an Abidjan-based international cocoa exporter. “Cocoa arrivals have slowed dramatically.”

Exporters said about 15,000 tonnes of cocoa beans arrived last week to the country’s main ports of Abidjan and San Pedro, down from about 85,000 tonnes the previous week.

Kona Haque, soft commodities analyst at Macquarie in London, said fears of violence “may prevent harvesting activity in the bushes or transporting of cocoa to the ports”.

The slowdown had reduced arrivals for the season, which started in October, to about 427,000 tonnes, down nearly 1 per cent from 430,700 tonnes in the same period of last season, exporters said.

In London, Liffe March cocoa, the industry’s benchmark, surged to an intraday high of £2,046 a tonne, the highest since mid-August and up 4.4 per cent on the day. In New York, ICE March cocoa rose to $3,079 a tonne, up 4.7 per cent on the day.

Cocoa prices have risen nearly 10 per cent since the announcement of the election results. In spite of the increase, prices in London are well below the 30-year high of £2,465 a tonne set in mid-July after Armajaro, a London hedge fund, took delivery of nearly all the certified stocks in Europe.

The price rise comes in spite of expectations of a large crop in west Africa, which accounts for 70 per cent of world output, following favourable weather in July and August.

Crop forecasters say Ivory Coast’s production will surge in 2010-11 to 1.4m tonnes, up 15 per cent from 1.19m in 2009-10.

Elsewhere, Ukraine said on Monday it planned to extend grain export restrictions, set to expire on December 31, to March 31 next year. In Paris, Euronext Liffe March European wheat surged to a two-year high of €238.75 a tonne.

Orange juice futures rose to a 3½-year high as freezing temperatures hit Florida, the world’s second-largest growing area. In New York, ICE January frozen concentrated orange juice rose to an intraday high of $1.667 per pound, up 6.3 per cent.

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