Bloomberg News

Ivory Coast Cocoa Premium Is Said to Remain Stable in Europe

November 07, 2011

Nov. 4 (Bloomberg) -- The premium buyers in the European market are prepared to pay for cocoa from Ivory Coast, the world’s largest producer, was stable over the past month even as local prices rose, three people involved in the trade said.

Ivorian beans from the 2011-12 crop started last month traded in Europe at 45 pounds ($72) to 50 pounds a metric ton above futures prices on the NYSE Liffe exchange in London, according to the people, who declined to be identified because they’re unauthorized to speak to the media. That compares with 40 to 70 pounds on Oct. 7, just before beans started arriving at ports, three traders said then.

Cocoa prices in Ivory Coast rose as farmers held back beans in hope of better prices. Average prices paid at the country’s main growing centers climbed to 727 CFA francs ($1.52) a kilogram (2.2 pounds) in the Oct. 24-31 period from 715 CFA francs in the Oct. 17-23 span, figures published by the Bourse du Cafe et du Cacao show.

“Since the beginning of the season, the cocoa price has been supported by the decision taken by Ivorian farmers to hold on to a portion of their beans in the hope of seeing higher prices,” Lysu Paez, an analyst at Natixis SA in Paris, wrote in a report to clients e-mailed yesterday.

Buyers in Ivory Coast had to pay a premium to NYSE Liffe prices of as much as 10 pounds a ton for beans as arrivals at local ports slowed, a trader said on Oct. 27. Beans at ports in the country usually trade at a discount.

Delayed Deliveries

Farmers also delayed bean deliveries to ports as they awaited government approval of an industry reform that would guarantee a minimum price.

“This action may have been a good bet, as last Tuesday local authorities did finally agree on setting a minimum cocoa guaranteed price for Ivorian farmers,” Paez said.

Ivory Coast’s cocoa farmers will get a guaranteed 50 percent to 60 percent of the international price of the chocolate ingredient as part of industry reforms approved by the government on Nov. 2, said spokesman Bruno Kone.

Ghanaian beans in Europe were 85 pounds to 95 pounds a ton above prices on NYSE Liffe, the people said. That compares with 90 pounds to 100 pounds on Oct. 7. The country is the world’s second-largest producer of cocoa.

European cocoa butter, used to make chocolate, was at a ratio of 0.97 to 1.04 times the NYSE Liffe price, the traders said. That compares to 1 to 1.05 times the exchange price on Oct. 7. Cocoa butter accounts for as much as 20 percent of the weight of a chocolate bar, according to Commodities Risk Analysis LC, a cocoa researcher based in New York.

Cocoa for December delivery fell 5 pounds, or 0.3 percent, to 1,677 pounds a ton by the 5 p.m. close on NYSE Liffe. Prices are down 17 percent this year.

--With assistance from Olivier Monnier, Baudelaire Mieu and Pauline Bax in Abidjan. Editors: Dan Weeks, Sharon Lindores.

To contact the reporter on this story: Isis Almeida in London at ialmeida3@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.


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