Fears that almost 500,000 tonnes of cocoa beans stored in warehouses in the Ivory Coast would deteriorate are now subsiding with the perception that a political resolution is imminent in the cocoa growing country, according to Rabobank
The Ivory Coast has been mired in political crisis since December, when incumbent Laurent Gbagbo refused to step down despite election results showing voters had backed his opponent Alassane Ouattara.
Cocoa bean exports from the leading cocoa grower have ceased since the end of January, following a call from Outtara for a suspension of all exports in a bid to cut off funding from his rival Gbagbo.
The imposition in January of EU sanctions on trade with the Ivory Coast also impacted, with the result being 475,000 tonnes of cocoa beans piled up in the Ivorian ports of Abidjan and San Pedro, awaiting export.
Months of international efforts failed to convince Gbagbo to leave power peacefully. Last week saw Pro-Ouattara fighters launch a nationwide offensive, and drive pro-Gbagbo forces back to Abidjan.
“The quick movement of the rival forces through the south of the nation last week suggested that a Ouattara could consolidate power over the nation quickly, ending the export ban, and allowing normal commerce to begin again,” suggests Keith Flury, senior commodities analyst at Rabobank.
This prospect, continued the analyst, led to a sharp drop in prices for cocoa on the futures exchanges in the past week. “Prices are likely to remain under pressure given the bearish supply fundamentals, and the likely liquidation by speculators,” he added.
However, Flury told ConfectioneryNews.com that there still exists a risk premium in the cocoa market, and it “will likely remain there until the situation is completely resolved.”
He added that the mid-crop which is harvested between April and May could now reach the market, though there may be some quality concerns. The prospects for the main crop in the autumn, added Flury, are much better if farmers are able to secure finance, fertilizer, and find labour.
However, longer term, commented the analyst, the situation remains precarious with lack of investment in cocoa production likely to mean output from the Ivory Coast could fall in the coming seasons.