March 16 (Bloomberg) -- Cocoa may rebound as much as 14 percent should an extended political standoff in Ivory Coast, the world’s biggest supplier, prolong an export ban into May, Macquarie Group Ltd. said.
Exports, accounting for 34 percent of global supply, were banned Jan. 24 by Alassane Ouattara, the internationally recognized winner of disputed presidential elections. The decree, combined with a lack of financing and trade restrictions imposed by the European Union in January, meant a 99 percent slump in the registration of beans for shipment in the two weeks ended March 3, the latest port data show.
Cocoa has risen 18 percent since the November elections, adding pressure to world food prices the United Nations says reached a record last month. Ouattara this week extended the ban until the end of the month. Another extension may take it into the mid-crop, the smaller of two annual harvests that starts in April.
“Cocoa processors are going to have to continue looking for alternatives,” said Kona Haque, an analyst at Macquarie in London who has covered commodities for 14 years. She correctly forecast the surge in prices that followed the first extension of the ban and now anticipates $3,700 a metric ton should the curbs continue into the mid-crop harvest.
Cocoa for May delivery was little changed at $3,254 a ton on ICE Futures U.S. in New York at 10:34 a.m. London time, bringing the gain in the past year to 14 percent. Arabica coffee futures doubled over the same period, and raw sugar rose 44 percent. Cocoa advanced to $3,775 on March 4, the highest price since January 1979, before declining on speculation that consumers have sufficient stockpiles for now.
Hedge Funds
Hedge funds and other speculators have more than doubled their bets on higher cocoa prices since the start of the year, according to data from the U.S. Commodity Futures Trading Commission. Their net-long position was 33,243 contracts as of March 8, up from 13,136 contracts on Dec. 28.
Incumbent Ivory Coast President Laurent Gbagbo ordered companies to start shipping cocoa by the end of this month or face sanctions and took control of local cocoa purchases and exports. About 440,000 tons are currently stored in exporters’ warehouses near the port of Abidjan, Malick Tohe, an adviser to Ouattara, said March 14.
Clashes between armed groups spread southward in Abidjan yesterday, residents said. Almost 400 people have been killed since the disputed election, according to the United Nations. Gbagbo retains the loyalty of the armed forces, while Ouattara has set up his rival administration in the Golf hotel in Abidjan protected by UN peacekeepers.
Cocoa Shipments
Cocoa shipments from Ivory Coast have almost come to a halt, according to ports data obtained by Bloomberg. From Jan. 21 to Feb. 3, 71,457 tons of beans were registered for export. That number dropped to 8,645 tons in the 14 days that followed. They were just 277 tons registered in the two weeks from Feb. 18 to March 3, down for 50,738 tons a year earlier, the data show.
Global output of the chocolate ingredient will exceed demand by 119,000 tons in the 2010-11 season, the International Cocoa Organization said March 1. Production in Ivory Coast may rise 6.7 percent to 1.325 million tons in the 2010-11 season that started Oct. 1, the London-based ICCO estimates.
Archer Daniels Midland Co., the world’s largest grain processor, suspended its operations in the Ivory Coast this month, the Decatur, Illinois-based company said in a statement March 8. Barry Callebaut AG, based in Zurich and the world’s largest maker of bulk chocolate, confirmed it was no longer exporting cocoa products from the country on March 9.
Olam International Ltd., a trader of commodities from coffee to cotton, is offering customers cocoa from other countries, Gerry Manley, director and global head for cocoa of the Singapore-based company, said in an e-mail March 8.
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