Cocoa output is still getting through the Ivory Coast’s ports or is being smuggled through Ghana for subsequent export via other West African ports, Euromonitor analyst Francisco Redruello told ConfectioneryNews.com.
Possible ban extension
However, Redruello said that if democratically-elected president Alassane Ouattara succeeds in fully implementing the export ban this would have an immediate impact on cocoa futures.
Recently, Outtara said he would extend the ban on cocoa exports, if Laurent Gbagbo did not step down by the time the ban expires on 23 February, reported the Financial Times.
In a joint statement, the Federation of Cocoa Commerce (FCC) and the European cocoa association (ECA) said: “If no cocoa is exported from Côte d’Ivoire, it will only be a question of time before consuming countries run out of stocks.”
Although Redruello said the impact the extended ban would have on cocoa stocks was “very dependent on the degree to which such ban is implemented”, he agreed with the FCC and ECA statement, explaining that end-of-season stocks were already 82,000 tonnes lower at the end of the 2009-10 season, before any export ban was even suggested.
A full implementation of the export ban would significantly reduce end-of-season stocks and prompt an immediate surge in cocoa commodity prices,he said.
“Latest official data does not suggest any appreciable disruption on cocoa supplies so far. If this happens, however, then it will have an immediate effect on trading room floors. We are not speaking about weeks, but literally days,” said Redruello.
“For example, immediately after rumours of supply disruption in Ivory Coast emerged, hectic trading prompted an increase in cocoa commodity prices. On the London stock market, for instance, LIFFE cocoa futures surged by 4.5 per cent in just four days of trading (20-25 January). Trading volume over those four days was in excess of 40,000 futures contracts,” he added.
Recent export data
According to local official deliveries data released on 4 February, Ivory Coast shippers and cocoa processors declared 80,415 metric tonnes of cocoa for export from 21 January to 3 February taking the cumulative total for the 2010/2011 season to 653,719 tonnes.
“This represents an increase of 4 per cent on deliveries registered during the same period last year. This increase suggests that political instability in the region has failed so far to impact cocoa bean deliveries to processors, despite the uncertainty it has recently caused among traders,” said Redruello.
National, regional and international consequences
However, the FCC and ECA reported that the difficulties in Ivory Coast had national, regional and international consequences.
According to the associations, shipping services have almost completely ceased due to measures prohibiting payments to port authorities. This has inhibited both export of products such as cocoa.
“At the domestic level, the severe difficulties faced by operators on the ground are extremely worrying, particularly for those who are exporters and represent the key interface between the internal and the international markets,” said FCC and ECA.
The FCC and ECA also reported “serious disruption” to gas and energy supplies in the region, which is forcing temporary closure of cocoa processing facilities “thus threatening the quality of existing cocoa stocks”.
The associations said that cocoa smuggling was “placing the short, medium and long term future of the cocoa chain at risk and seriously threatens successful sustainability partnerships patiently built over the years with a large number of farmers communities”.