The unsettled political situation in the Ivory Coast took a turn last week when President Alassane Ouattara declared a 30-day ban on cocoa and coffee exports. The ban was intended to cut cash flow to incumbent president Laurent Gbagbo who has refused to leave office after Mr. Ouattara won a Nov. 28, 2010, run-off election certified by the United Nations. Mr. Gbagbo still controls the country’s military and the ports, and thus exports, while Mr. Ouattara has set up office in a hotel guarded by U.N. troops.
Cocoa bean futures prices quickly shot to one-year highs, eased slightly after it was realized most processors had adequate supplies to carry them through the 30-day ban, but then proceeded higher as the week progressed. Concern was acute in Europe, which sources most of its cocoa beans and products from the Ivory Coast. While the trade was slightly less anxious in the United States, which sources considerable supply from Indonesia, the cash market came to a near standstill, and cash cocoa powder prices advanced. The market was uneasy on concern violence may escalate and uncertainty as to whether the ban would last 30 days or go longer, or if it would even be effective.
The U.S. State Department said the United States supported the ban.
The Ivory Coast unit of U.S.-based Cargill, Inc., said it would honor the ban and would suspend purchases. By midweek, five other major companies indicated they, too, would comply. Reports from the Ivory Coast indicated cocoa beans and products cleared for export prior to the ban may be shipped, but new arrivals at ports would be stored and exports suspended until Feb. 23.
The latest development was just one more piece of what has been an unusual cocoa market that has seen deliverable cocoa bean supplies “cornered” by a single company last year in London and cocoa powder prices holding at historical highs amid much uncertainty about cocoa and chocolate demand related to the economic slowdown and recovery.