KASNAS CITY — The unsettled political situation in the Ivory Coast, the world’s largest cocoa bean producer, took a major turn this week when new president Alassane Ouattara declared a 30-day ban on cocoa and coffee exports in an attempt 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, while Mr. Ouattara has set up office in a hotel guarded by U.N. troops.
Cocoa bean futures prices shot to one-year highs and approached 30-year highs Monday after the ban was announced over the weekend. Prices fell back slightly on Tuesday as it was realized most processors had adequate supplies to carry them through the 30-day ban, but futures prices moved higher again on Wednesday. Cash cocoa powder prices in the United States also firmed, according to traders, although trading was near a standstill due to already tight powder supplies and new uncertainty about supply going forward.
New York March cocoa bean futures closed at $3,352 a tonne Wednesday, up 5% from $3,184 a tonne on Jan. 21 and up about 20% from around $2,800 in late November when the election was held. Cash cocoa powder prices were raised about 4c a lb, or 2%, across most grades with the basic 10% to 12% natural quoted at $firstname.lastname@example.org a lb this week.
The Ivory Coast unit of U.S.-based Cargill, which is thought to buy about 15% of Ivory Coast cocoa bean output, was the first processor to say it would honor the ban and would suspend purchases, while several other global cocoa processors requested clarification, continued to assess the situation or offered no public comment. But by mid-week five other major cocoa exporters, still wishing to remain unnamed, that account for the bulk of cocoa bean and product exports form the Ivory Coast indicated they also would honor the ban.
Press reports indicated U.S.-based Mars Inc. and Switzerland-based Barry Callebaut had sufficient stocks to see them through the temporary ban and chocolate production would not be affected. Other companies also appeared to have sufficient supply going into the key chocolate production period ahead of Easter, although most did not comment.
Concern was especially high in Europe, which sources most of its cocoa beans and products from the Ivory Coast. The impact was expected to be less severe in the United States, which also gets significant quantities from Indonesia, although main crop harvest there doesn’t begin until April. Much of the Ivory Coast main cocoa bean crop already had been harvested for the 2010-11 season, which began Oct. 1, 2010, and had been delivered to ports and exported or to processors within the country. Cocoa beans and products cleared for export prior to the ban were allowed to be shipped but new arrivals at ports were being stored and exports of the new arrivals were suspended until Feb. 23.
But the market was uneasy, based on the history of political unrest in the Ivory Coast and its impact on cocoa markets globally, on concern violence there may escalate, and on 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. U.S. President Barack Obama was scheduled to meet with U.N. Secretary-General Ban Ki-moon and West African leaders this week to seek a possible resolution to the political standoff in the Ivory Coast. While most West African nations have recognized Mr. Ouattara and the new president, some have not, with Uganda reported to be the latest nation to question the election results.