Cocoa hit a
one-year high on Monday after Ivory Coast’s presidential claimant,
Alassane Ouattara, locked in a standoff against incumbent Laurent
Gbagbo, urged a month-long ban on exports from the world’s top producer.
Dealers said prices
were rising as the international market was thrown into turmoil on
uncertainty over what Ouattara’s call meant, given that Gbagbo controls
the supply pipeline to ports.
Liffe cocoa futures jumped over 7 per cent to a 6-month peak of 2,269 pounds per tonne.
Ivory Coast is locked in a political stalemate after a bitterly contested presidential election on November 28.
Ouattara, the
internationally recognised president of Ivory Coast, remains in a hotel
guarded by U.N. troops while Gbagbo has appointed his own
administration and remains in power despite pressure to step down.
Confusion set in as
a European Commission source dealing with sanctions on Ivory Coast told
Reuters the European Union’s sanctions on Ivory Coast in the wake of
the country’s contested presidential election did not amount to a ban
on cocoa exports.
“The EU is applying
targeted sanctions, in part aimed at avoiding negative consequences for
the local population, so there is no embargo on trade,” the source said.
Dealers said that
if exporters respect Ouattara’s call for an export ban, there will be
less availability of cocoa on the international market, which could
bolster cocoa prices.
Seeking clarification
Two European cocoa
industry associations said on Monday they were still seeking
clarification of a call for a cocoa export ban by Ivory Coast’s
presidential claimant. Ouattara said in the statement on Sunday anyone
contravening the ban would be liable to sanctions.
“If it’s enforced
prices of cocoa will go through the roof,” Gary Mead, analyst with the
VM Group in London, said of Ouattara’s call. “If he’s serious, if they
can enforce such a trade embargo, the disruption would be huge.”
But others were far more sanguine as they expected that beans would continue to flow despite the political backdrop.
Romain Lathiere, a
fund manager with Swiss-based Diapason Commodities Management, said:
“In the end, the exporters are still going to be able to export. Cocoa
will transit to Ghana, or other countries, and will still get out.”
ICE May cocoa
jumped 2.4 per cent or $77 to $3,250 per tonne at 0955 GMT, having
earlier touched a one-year peak of $3,340 per tonne.
Liffe May cocoa was
up 54 pounds or 2.6 per cent to 2,168 pounds per tonne at 0956 GMT,
having earlier touched a six-month high of 2,269 pounds per tonne.
Gbagbo still
controls the cocoa supply pipeline from Ivory Coast and is likely to do
everything possible to facilitate exports in order to generate cash to
pay the military and state workers.
Cocoa market
sources say exporters in Ivory Coast are becoming increasingly nervous
and would not wish to risk sanctions or to alienate Ouattara.
