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MarketScreener Homepage  >  Commodities  >  New York Cocoa       

NEW YORK COCOA

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Ivory Coast struggles to sell cocoa amid dispute over farmer premium

12/01/2020 | 12:35pm EST
A worker sews up cocoa bags after drying to load them into a truck bound for the port of San Pedro, at a cocoa cooperative in Duekoue

ABIDJAN (Reuters) - Ivory Coast has not sold up to 15% of cocoa from its ongoing main crop, while the vast majority of the upcoming mid-crop remains unsold as the COVID-19 pandemic drives down chocolate demand, four industry and regulatory sources said on Tuesday.

The performance is the worst in decades for the world's top cocoa producer and comes amid an escalating standoff with industry buyers over a premium aimed at combating farmer poverty.

Ivory Coast normally sells export contracts for all of its main crop and 30-40% of its mid-crop before the season begins in October. The last time the country did not sell all of its harvest was the 1988/89 season.

Exporters say the introduction of the $400 per tonne premium this season, known as a living income differential (LID), has driven up prices for Ivorian cocoa just as demand is depressed because of the economic impact of the pandemic.

A source at the Ivorian Coffee and Cocoa Council (CCC), which regulates the industry, said the country had between 200,000 and 250,000 tonnes of unsold cocoa from the main crop. The main crop runs from October to March, and traders and industry experts expect it to yield about 1.6 million tonnes.

The source said between 90% and 95% of contracts for the April-to-September mid-crop, which is expected to yield about 500,000 tonnes of cocoa, had not yet been sold.

Two industry sources confirmed those numbers.

"There is little enthusiasm and interest from traders, chocolate makers and grinders," the CCC source said.

The CCC did not immediately respond to a request for comment.

Industry sources said traders and grinders were not playing their usual role of buying up excess beans and stockpiling them to sell later because the higher prices associated with the LID meant exporters were increasingly looking to buy beans from countries besides Ivory Coast and neighbouring Ghana.

The two countries, which are jointly implementing the LID, produce two-thirds of the world's cocoa.

"Chocolate makers can always buy stocks from elsewhere like Ecuador, Brazil, Nigeria or Cameroon that are less expensive," said the director of an export company operating in Ivory Coast.

The LID has led to an increasingly public spat between authorities, and chocolate companies and cocoa traders.

Ivory Coast and Ghana said on Monday that they were cancelling cocoa sustainability schemes run by Hershey, accusing the company of sourcing unusually large volumes of physical cocoa on a futures exchange to avoid paying the LID.

Hershey and other companies say they are committed to paying the LID.

Six regulatory and industry sources said the CCC had made one concession to industry by reducing the country differential, a premium paid for export contracts, on deliveries between January and March 2021 to about $53 per tonne from around $200 previously.

(Reporting by Ange Aboa; Editing by Aaron Ross and Pravin Char)

By Ange Aboa


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
CCC S.A. 6.61% 82.3 End-of-day quote.-5.96%
EURO / BRAZILIAN REAL (EUR/BRL) 1.15% 6.3752 Delayed Quote.1.52%
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