Ivorian Cocoa Prices Rise Further on Supply Fears

Abidjan, Dec 18 - Cocoa farmgate prices in most of Ivory Coast's growing regions kept their upward momentum last week as rates rose at ports and buyers anticipated a shortage of supply in the New Year, farmers and exporters said on Wednesday.

Figures from the Coffee and Cocoa Bourse (BCC) showed average prices well above 600 CFA francs ($1.23) per kg in most regions and more than 700 francs in one area. One buyer said prices at San Pedro port exceeded the 745 CFA franc official estimate.

Cocoa arrivals at ports in the world's top grower have improved in recent weeks and reached 356,000 tonnes from Oct. 1 to Dec. 14, exporters estimated on Monday. However, the accumulated total was still sharply down from 650,429 tonnes in the same period of the previous season.

Fears of a shortage of cocoa from Ivory Coast helped propel London cocoa futures to a 22-year high on Wednesday.

The May contract rose 52 pounds, or more than 3 percent, to a peak of 1,751 pounds a tonne.

"Exporters bought cocoa at very high prices at Abidjan port to ensure they secured maximum volumes," said the purchasing manager of a European exporter based in the main city Abidjan.

"We hit 800 francs per kg at the port because they (the exporters) think the campaign will be short and there will be a deficit in volumes in January."

Ivory Coast had a troubled start to the season after many farmers went on strike complaining buyers were not paying the non-binding guideline price of 700 CFA francs set by sector administrators when the new season was launched in October.

But farmgate prices have steadily risen as concerns mounted over the 2008/09 harvest, which has been hit by poor weather and disease. Administrators have slashed the crop forecast to 1 million tonnes, down from around 1.3 million last year.

BCC figures from the centre-western region of Daloa, which produces one-quarter of the national output, showed a 5 CFA franc price rise to 625 per kg. But farmers said competetition was driving prices higher.

"In the bush, farmers received, on average, 650 francs per kg and in town the exporters bought beans at 700 francs per kg because there are not many beans," said farmer Attoungbre Kouame, whose farm is on the outskirts of Daloa.

In Ivory Coast's western region of Soubre, the average price jumped by 20 francs to 650 CFA francs, as exporters, particularly grinders, still competed for beans.

"Farmgate prices have risen a lot. A lot of farmers sold for 675 francs per kg because the grinders are hunting for beans," said farmer Roger Tano whose farm is near Soubre.

The rise in world cocoa prices over the last few weeks was initially driven by concerns over crop prospects in Ivory Coast, but dealers said the recent spike was more due to fund and investor buying and the falling pound.

Below are average farmgate prices in CFA francs per kg for Dec. 8-14, as quoted by private buyers, cooperatives and shippers, and published by the (BCC).

Included are prices paid on delivery at San Pedro and Abidjan ports.

                      Dec 8-14          Dec 1-7

 Abengourou              655              n/a

 Aboisso                 585              575

 Adzope                  680              n/a

 Agboville               700              650

 Bongouanou              625              615

 Daloa                   625              620

 Divo                    690              665

 Gagnoa                  630              n/a

 San Pedro               625              585

 Sassandra               n/a              n/a

 Soubre                  650              630

 --------------------------------------------

 Abidjan (port)          n/a              n/a

 San Pedro (port)        745              705

($1=488.0 CFA Franc)

Reuters

Global Crisis Hits Nigerian Cocoa Grinding

Source: Reuters
16/12/2008

Lagos, Dec 16 - The global financial crisis has slashed cocoa grinding in Nigeria, and there have barely been any exports to Europe in the last two months, the Cocoa Processors' Association of Nigeria secretary general said.
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"The global crisis has crippled business, almost everything is at a standstill," COPAN Secretary General Felix Oladunjoye told Reuters in an interview.

About 95 percent of cocoa output from Nigeria, the world's fourth-largest grower, is shipped to chocolate makers in Europe.

Nigeria has the capacity to process about 100,000 tonnes of cocoa per year, grinding roughly 25 percent of national output.

Most of Nigeria's eight functional plants were operating at around 60 percent of capacity due to poor infrastructure, high costs and multiple taxes, but analysts say the economic meltdown has further cut the grinders' capacity to less than 20 percent.

"Most cocoa processors are not producing, the few that are processing are doing so epileptically because there is no demand for processed products in Europe," Oladunjoye said.

The few shipments from Nigeria of cocoa products -- butter, cake, liquor and powder -- were for contracts signed before the crisis but which were delayed for various reasons.

"There have been no new contracts since October. Importers are not importing because they can't get credit from their banks and factories are closing down, nobody can say he is covered," Oladunjoye said.

The government launched an ambitious cocoa revival campaign in 2005 to increase production, local processing and domestic consumption of cocoa products, but incentives from the government are often delayed.

Oladunjoye said there had been no significant increase in domestic consumption in the last three years to make up for the lull in exports since October.

"There is really nothing we here can do about the global crisis but wait until the various bailout programmes initiated by Western countries begin to manifest," Oladunjoye said.