Cocoa News - 2002
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Ivory Coast conflict lifts exports - 16/12/02

Shippers in Ivory Coast have stepped up exports of cocoa in an effort to clear their warehouses as a violent rebellion engulfs more than half the country and some key growing areas.

Exporters in Ivory Coast's southern commercial ports of Abidjan and San Pedro have become increasingly nervous about the prospect of fighting spreading to the towns and preventing them from shipping their purchases from the current crop. An insurgency that split the country in two following a coup attempt three months ago has spread to cocoa growing areas in the west of the country where about 10% of the crop is produced.

While the main southwest growing areas remain under government control, the fighting has disrupted harvesting and marketing activities in the north and now the west. Despite the chaotic situation, cocoa has been arriving at shippers' factories but initially exports had not appeared to be leaving with any great urgency. However, according to the latest port data from San Pedro, exports rose sharply in October, compared with 16,074 tonnes in the previous month and 23,926 tonnes in the same month a year ago.

Exports of semi-finished cocoa products reached 2,480 tonnes, compared with 1,784 tonnes the previous month and 1,061 tonnes in October 2001.

The spread of the conflict to new parts of the country has worried industry buyers, who are concerned that the risk of disruption to exports has grown considerably. Prices have risen to around £1,335 ($2,111) a tonne from £1,175 in late November.

Cocoa price hits 16-year high - 26/09/02

The price of cocoa has soared to its highest level for 16 years because of fears that a military uprising in Ivory Coast will cut off supplies. Fighting broke out last week in the West African country, which is the world's biggest grower of cocoa.

Ivory Coast supplies 40% of the world's cocoa and the next three months are crucial for prices as most of the crop is shipped between October and Christmas.

The price of cocoa for delivery in December jumped $37 (£23) in New York to $2,157 per tonne on Tuesday, a rise of nearly 2% and the highest closing price since September 1986.Prices had already risen by about 60% this year because of a shortage of the crop. Supplies of cocoa beans are now expected to be poor for the third year in a row.

The centre of the uprising, the city of Bouake, was reported to be relatively quiet on Wednesday morning, though gunfire was heard early in the day. The French and US governments have sent troops to evacuate their citizens.The government of Ivory Coast has accused the rebels of being backed by foreign governments. But they say they are fighting against dictatorship and deny having outside help. They have accused the Ivory Coast government of using Angolan troops in their attempts to retake the town of Bouake.

Traders forecast supply deficit - 23/09/02

Cocoa traders have forecast a global supply deficit for the third successive year as minor increases in production are unlikely to keep up with a recovery in grindings over the coming months.

ED&F Man, the international cocoa trader based in London, has forecast global production will increase by just 1% during the 2002/03 season to 2.815m tonnes. It said this was due to falling output in many of the major origins.

Man's prognosis of the crop in Ivory Coast, the world's leading producer, confirmed fears of lower yields despite better farm maintenance. The Ivorian main crop is expected to fall to 995,000 tonnes from 1.060m tonnes, last season.

Man said that Ghana's forthcoming crop looked promising, with an above-average pod load on the trees.

Across Ghana, outbreaks of black pod disease still pose a risk in the coming weeks, but provided damage is not widespread, Man forecast a main crop of 390,000 tonnes, which would be a huge improvement on 320,000 tonnes harvested in 2001/02.

The 8% decrease in grindings in 2001/02 caused stocks to fall to more manageable levels and helped increase prices, which is already helping many grinders to resume their earlier output levels. Man forecast a rise in demand to 2.950m tonnes from 2.805m tonnes in 2001/02, but said higher prices for chocolate and cocoa products would limit demand.

ICCO prepares for October move to Abidjan- 17/09/02

The International Cocoa Organisation plans to open its new headquarters in Ivory Coast next month after financial constraints forced it to abandon its costly London home.

After almost 30 years at its base in Central London, the ICCO is set to continue its work in fostering co-operation between cocoa producers and consumers from Abidjan, the capital city of leading cocoa grower Ivory Coast. The move comes after several years during which the ICCO deliberated how to overcome its financial difficulties.

Budgetary pressure grew considerably after the rent charges for its London office increased by 140% and members continued to fail to pay their dues on time.

ICCO officials said that Abidjan was the most logical location due to the offer from the Ivorian government of 10-years of guaranteed rent-free accommodation in a modern building in the centre of town. The new headquarters will receive a formal, grand opening in March when the next round of meetings will be held.

At a meeting of the ICCO council in The Hague last week, Adriaan Frijlink, chairman of the ICCO council, said : "They are still remodelling the premises but the Abidjan office is supposed to open in October 1. The reason we are moving is a lack of money - our budget is very, very small."

During the meetings last week, ICCO members laid out procedures and selection criteria for a new executive director. Eduoard Kouame stepped down earlier this year and a replacement was meant to be chosen in July. Jan Vingerhoets, who was head of ICCO's economics and statistics, is serving as officer-in-charge.

Ghana awaits large cocoa crop - 04/09/02

Buyers of Ghanaian cocoa have forecast a good sized crop over the forthcoming season due to favourable rains and a national pesticide spraying campaign.

Ghana's cocoa output dropped last season due to disease and smuggling, but buyers are optimistic that their purchases will increase this year due to better growing conditions. On average, Ghana produces around 350,000 tonnes of cocoa from its main crop and 40,000 to 45,000 tonnes more from the later mid-crop.

Last season's main crop was officially forecast at just 330,000 tonnes, down from initial estimates of 400,000 tonnes due to black pod disease. Reports suggest a sizeable portion of the crop was smuggled to Ivory Coast where prices were better.

Although European buyers predicted that production would be unchanged from last season, local buying officials said that there were signs of a better harvest this year. The Ghana Cocoa Board (Cocobod) has vowed to raise prices in line with increases in the world market, giving farmers less incentive to sell on the black market. Last week, one Cocobod source said that the entity had secured a $320m loan to finance the purchase of beans from farmers next season, which is due to start on October 12 but could be brought forward by a week due to the early start to harvesting.

Farmers and analysts in Ivory Coast have also voiced optimism about the 2002/03 harvest, which has already started in some areas and could continue nationally until as late as March next year. A larger crop would be a boon for grinders who are hoping to increase grindings in the second half of 2002 to take advantage of attractive margins.

Ivory Coast increases cocoa tax - 23/08/02

The world's leading cocoa grower, Ivory Coast, has raised export taxes on beans and other products to exploit high world prices. The tax on cocoa beans has been raised by 22% to 220 CFA francs (£0.20) per kilogramme. Cocoa prices reached a 15 year high in July, and observers said the Ivory Coast's government felt it was not receiving enough revenue from its main export.

The International Monetary Fund (IMF) earlier this month urged the West African country to increase its cocoa tax, levied at a flat rate, before this year's crop goes on the market on 1 October. Cocoa futures prices have rallied in the past weeks, with traders predicting a shortfall in supply for a third consecutive year. Ivory Coast last year fixed its cocoa tax at a level equivalent to less than 20% of the world price.

Despite the tax hike, the rise in cocoa prices means that the levy equates to only about 15% of the price beans will be sold for. Exporters said the tax rise was "reasonable" and in line with expectations. Ivory Coast, which produces 44% of the world's cocoa, expects a slightly higher harvest this year of between 920,000 and 1 million tonnes. The higher prices mean farmers can afford to buy pesticides and spray their plantations, raising prospects for yields next year.

Cocoa Producers Must Adopt Common Price Strategy - August 2002

Mr. Hope Sona Ebai, the Secretary General of the Cocoa Producers Alliance, says there is the the need for cocoa producing countries to adopt new marketing strategies to enhance the price of the commodity on the world market.

Briefing the press in Accra, on the 40th anniversary celebration of the Alliance, Mr Ebai, said although the 10 countries in the Alliance produce over 80 per cent of the world output yet they have no such control over the market price.

Its main focus would be to re-position the Alliance to achieve the traditional goals of ensuring adequate supplies to the market at remunerative prices, promote cocoa consumption and discuss common problems to foster social and economic relations among the producing countries.

Cote d'Ivoire, Ghana and Brazil all major cocoa producing countries are members of the Alliance.

The new strategy must not seek to interfere with the general direction of world market trends but should promote and strengthen the welfare and interest of producing countries.

He attributed poor prices of the commodity on the international market to lack of storage facilities that would enable countries keep their produce for longer periods, especially during seasons of glut and to release them when needed to maintain market equilibrium and boost prices.

Also, development pressures on governments of member countries make it difficult to cut production since they must make more money to meet the demand of the citizenry, he said.

The theme for the celebration is: "Sustainable Cocoa Economy, Means Towards Poverty Alleviation."

US$ 20 ADB loan - July 2002

The African Development Bank (ADB) approved a $20.4 million loan to finance a rural development project in the eastern part of the Côte d'Ivoire. The Middle Comoe Rural Development Support Project will aim to improve the sustainability of the country's coffee and cocoa production, as well as diversify agricultural production in the region.

European buyers turn to Asia - June 2002

European grinders have stepped up their purchases of Indonesian cocoa beans in a desperate bid to get round the spiralling cost of better quality West African produce.

Over the last year, cocoa bean prices have been steadily rising, with West African beans being the most expensive due to their superior quality. High grade beans from Ivory Coast and Ghana are selling for up to $1,800 a tonne.

Indonesian beans are generally not as good as West African beans and in the past, some European grinders have avoided them due to quality concerns. However, under immense financial pressure, some grinders have decided to forego their qualms about quality and have started placing orders for Indonesian beans.

This season, grinders have had to adopt a range of measures to ameliorate the rising cost of beans and the depressed market for by-products, particularly cocoa butter. The combination of the two factors has meant that grinders have borne the brunt of the situation, forcing many to close plants.

Europe's first shipment of beans from Indonesia arrived in Belgium a fortnight ago and it is believed to have been carrying cocoa for a number of companies, among them ED&F Man, the London-based trade house. The vessel was said to have been diverted by Man to Europe from the US port of Philadelphia. Indonesian beans have a low fat content, which results in poor yields when they are pressed for butter and the different flavour is also alien to many European consumers.

Abundant rainfall boosts Ivorian crop prospects - June 2002

Ivory Coast is expected to have a plentiful harvest over the forthcoming season as a result of abundant June rainfall which has led to the emergence of a large number of pods and flowers on trees.

The harvesting of Ivory Coast's main cocoa crop normally begins in October and the recent rains are believed to have come at just the right time. In the key growing areas of the Ivorian cocoa belt, the rainfall has been above average and allowed for healthy development of the new crop.

Flowering trees need a mix of good rainfall and sunshine in order to produce pods but until recently rainfall had been inconsistent. In Daloa, the centre of the western area accounting for a quarter of the Ivorian crop, one crop analyst said: "Plantations got abundant rains which triggered good flowering. Good sunshine is necessary now to maintain the development of flowers."

ICCO relocates HQ to Abidjan - May 2002

The International Cocoa Organisation (ICCO) has decided to relocate its headquarters to Abidjan in a bold step designed to keep the body from going bankrupt.

Since its establishment in 1973, the ICCO has had its headquarters at Berners Street in the West End of London, but two years ago a huge 140% increase in rent forced the body to contemplate moving to a cheaper location. The difficult decision is designed to ensure that the intergovernmental organisation can continue to develop its role as a focal point for producing and consuming countries.

The ICCO said the move to Ivory Coast would significantly strengthen the financial situation over the coming years. The Ivorian government was keen to see the ICCO relocate to Abidjan and promised to accommodate the body in a new building that would be rent-free for 10 years.

The ICCO will hold at least one council meeting each year outside of Abidjan - most likely in London as it is more accessible, particularly for the Latin American countries. The relocation will take effect no later than January 1, 2003.

Ivorian Cocoa mid crop forecast increases - April 2002

Cocoa officials in Ivory Coast have forecast a significant improvement in the size of the current mid crop due to good rainfall and increased fertiliser usage.

Earlier this season, Ivory Coast had been expected to have a poor mid crop of about 110,000 tonnes due to a dry harmattan season. However, the Ivorian cocoa and coffee bourse (BCC) believes that the harvest will now be between 240,000 and 270,000 tonnes.

Officials said that the outlook had improved due to good rainfall in key regions during November and February and high prices had enabled farmers to pay better attention to their trees. Fertiliser sales have increased dramatically since last November, when cocoa prices began a remarkable uphill run.

Ivorian traders look to mid crop - March 2002

Cocoa bean arrivals at Ivorian ports have started slowing down over the last few weeks following the premature end of the main harvest.

Over the last fortnight, local processors appear to have lost interest in the main crop and have begun contending for the small mid-crop which is due to begin arriving in a few weeks' time. Arrivals at Ivory Coast's main ports of Abidjan and San Pedro reached 1.004m tonnes by March 3, but have begun to decrease in recent weeks following an early end to the main crop harvest.

In the two weeks before March 3, purchases from the main crop fell to just 5,000 tonnes, with Cipexi, the leading Dutch buyer, accounting for 1,013 tonnes of the total.

As a result of the dry weather, some forecasters have pegged this year's mid crop at little over 100,000 tonnes, compared with the 150,000 to 200,000 tonne harvests achieved in recent years.

Ghana Farmers Will Not Benefit from High Cocoa price - March 2002

Bad weather and political instability in major producing countries have increased cocoa prices to a 14-year high. The cocoa price has risen nearly 70% since September, reaching £1,190 a tonne in London on Friday.

The world's third-biggest cocoa producer, Ghana, has also seen its production fall and traders believe the country may have sold more cocoa than it can actually supply this season.

Ghana is the only substantial cocoa producer that still agrees prices at the beginning of the season. The price farmers will receive for their crop each season - October to March - is arranged by a government board in the summer.

This forward selling means farmers in Ghana will not benefit from the current rise in cocoa prices and some farmers have smuggled cocoa over the border to Ivory Coast where prices are linked to the market price.

Ivorian cocoa plan takes shape - March 2002

IVORY Coast's cocoa forward sales programme is due to begin later this month after Abidjan indicated that it is putting final touches to the financial agency that is hoped to manage the scheme.

Cocoa authorities in Ivory Coast have been charged with starting a forward sales system for around 1m tonnes of next year's crop in an effort to stabilise prices. Under the plan, the cocoa crop would be auctioned months before the harvest and a guaranteed price would be set at the start of the season to serve as a reference price to calculate how much farmers would get. The privately-run Regulatory and Control Fund (FRC) has said that forward sales would have to start during March so that the crop can be marketed in time.

However, the FRC has failed to address the worries of foreign traders who said they had no trust in the new system. Many traders have claimed that the marketing bodies entrusted with running the programme lacked the credibility needed to begin international trading.

Under the scheme, the Cocoa and Coffee Bourse (BCC) would sell beans to exporters but traders said it had no track record and lacked credibility.

Nigerian farmers abandon plan to hoard beans - March 2002

Nigeria cocoa farmers have moderated in their attempt to rally prices further by hoarding beans and have begun freeing stocks to traders for export.

Since the start of the season, Nigerian producers are believed to have been reluctant to release their beans as they searched for higher returns despite the increase in world prices since November. Shippers and buyers for the local industry have had to stall their operations as a result of the farmers' action.

Importers said that growers and intermediaries had kept track of the increase in international price levels, adjusting their own prices accordingly and urging buyers to pay more than in previous seasons.

Ivory Coast sets up cocoa regulatory body - March 2002

IVORY Coast has set up a new body to manage the financial aspects of the newly structured cocoa sector as part of its ongoing liberalisation of the industry.

Last week Abidjan established the Regulatory and Control Fund (FRC) to administrate the large sums of money generated through taxes on cocoa.

Also, Alphonse Douaty, the agriculture minister, has exchanged places with Sebastien Dano Djedje, the Ivorian minister for institutional relations, in a move that could break the deadlock between the state and farmers over the introduction of a price stabilisation system.

Meanwhile, Ghana has raised its farmgate price for cocoa beans to cedis61.2m ($832) a tonne from cedis4.384m a tonne to stem the tide of smuggling to Ivory Coast where prices are higher.

Ivory Coast raises export tax - February 2002

IVORY Coast has raised the export duty on cocoa by 12% as part of a government plan to increase tax revenue and encourage grinders to process more beans locally.

As the Ivorian government draws up its budget for the coming 2002/03 financial year, it has decided to raise the export duty on cocoa and semi-finished cocoa products. The measure is intended to boost revenue for government coffers from its top agricultural export, while making it more economical for processors to run manufacturing facilities in the country.

Duty on cocoa beans has risen to CFAFr180 (24.3¢) a kg, from CFAFr160 a kg, and is equivalent to around $243 for a tonne of beans. Duty on cocoa liquor, butter and cake have risen to CFAFr165, CFAFr125 and CFAFr90 respectively, with immediate effect. Paul Bohoun Bouabre, the Ivorian finance minister, said the government wanted to ensure that grinding remained attractive for processors by keeping the gap between duties on beans and butter at about CFAFr50.

Mr Bohoun added:"We have improved the situation for the grinding sector by boosting their tax advantages. We want to maintain an acceptable level of cocoa processing in Ivory Coast."

With world prices having escalated to around $1,440 a tonne this season, the $27-a-tonne increase in export duty on beans was seen as very modest, to the relief of the major exporters who have already had their buying activities severely curtailed this season. Exporters' purchases were capped at 50,000 tonnes each for the first three months of the season, falling to 45,000 tonnes for the second quarter, which has allowed smaller companies to gain a bigger share of the market.

Prices rally to four year high - February 2002

Global cocoa prices have rallied to their highest point since 1998 due to considerations about decreasing Ivorian supplies and a an early finish to the harvesting of this year's main crop.

Supplies of cocoa are still trickling into Ivorian ports but this year's smaller crop has increased fears of severe production shortfall and sent cocoa prices twisting to new heights.

Exporters said practically all the cocoa beans from Ivory Coast's main crop had been swallowed up and only very small quantities would become disponible over the next months as the remnants were cleared from farms upcountry.

Arrivals had descended to 25,000 tonnes at the end of January, from 50,000 tonnes in previous weeks, leading to a tail off in hedge pressure on international markets and a mild alarm among buyers.

In London, futures prices hit three-and-a-half year highs, jumping £35 a tonne to reach £1,059 a tonne, which was followed by a surge in New York where futures rose $50 to hit $1,400 a tonne. Traders said the increases could lead to further price improvements.

Poor Ghanaian crop raises fears of shortage - GHANA - January 2002

Ghana is challenging the prospect of major supply issues as a result of a smaller-than-expected crop due to damage caused by black pod disease.

The flow of cocoa beans from Ghana has weakened since last month and buyers fear that a smaller-than-expected crop may deprive the local industry of sufficient supplies unless the state exporter, the Ghana Cocoa Board (Cocobod), buys back beans sold earlier this season. Export contracts were entered into in anticipation of a good crop, but this could now lead to local shortages unless Cocobod buys back some of its beans earmarked for export.

Over the last year, black pod disease has become more common across Ghana despite the mass-spraying of farms, funded by Accra. Apart from the small crop due to disease, arrivals have also been inferior than previous years, which buyers blame on smuggling into Ivory Coast.

A buyer said: " Ghana might have to introduce a buyback operation, but as prices have increased considerably, Cocobod would have to pay out considerably more to get its cocoa back".

Ivorian forecasters fear little from Harmattan - January 2002

Weather analysts in Ivory Coast are optimistic that the quality of the current cocoa crop will not be affected by the start of the Harmattan season and its accompanying dusty winds.

West Africa is currently in the midst of its dry harmattan season which runs between December and March. Harmattan is characterised by strong winds which are swept southwards from the Sahara desert towards the Atlantic Ocean. The arrival of harmattan coincides with the maturing of the mid-crop whose harvest begins in April and in the past, strong winds have been known to damage trees.

One Abidjan weather analysts said: " Weather conditions are not worrying now. The harmattan is not so strong and the air moisture is not too low, so I cannot see anything that will affect the pods."
Cocoa futures decline on the New York Board of Trade - January 2002

There is a continuing downwards trend for cocoa futures. The trend could be halted if the harvest from the Ivory Coast is lower than expected (see below).

ADM reduces cocoa grinding capacity in Ivory Coast - January 2002

One of Ivory Coast's major grinding plants, Archer Daniels Midland, has gut griding capacity due to the shortage of beans. Deliveries have been limited due to the government and farmers federation limiting the volume of beans released to try and keep prices from collapsing. ADM has been importing beans from Ghana at some cost to keeping grinding levels up.

Export quotas reduced in Ivory Coast - January 2002

The ceiling on the volume of beans exporters can take out of the country has been lowered by the Ivorian government. For the next three months (Jan - Mar) 45,000 tons of cocoa can be exported out of the country - this is down from the previous ceiling of 50,000.

The government has set the ceiling to try and reduce the dominance of large exporters which will allow smaller players a bigger role. It is also part of a drive to limit supply and ensure price stability. Some traders and buyers say that the ceiling is being disregarded by larger exporters and was contrary to Abidjan's committment on free trade.

Heavy Ivorian arrivals catch trade by surprise - January 2002

Despite taking up slowly, traders said the pace of arrivals from the main crop has surpassed many people's expectations, reaching an estimated 700,000 tonnes for the first three months of the season. This compares with about 650,000 by mid-January 2001 and 770,000 by the end of that month.

Operators had been expecting an early crop but the record level of arrivals took many by surprise, and traders said the harvest was expected to have a short tail, resulting in a sharp decline in arrivals later this month.

In December, between 60,000 and 70,000 tonnes of cocoa beans ere arriving at Ivorian ports each week but this was expected to fall to around 30,000 to 50,000 tonnes a week this month. One UK trader said that chattering over new marketing procedures had retarded the start of exports and made the market very nervous but had not slowed arrivals.

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