Econintersect: If you bought cocoa futures recently you will be a happy investor Monday. Cocoa prices should jump dramtically as the newly elected president of Ivory Coast has instituted an export ban effective, at least initially, for one month.. The ban has been implemented because of an internal political dispute in the country. Ivory Coast produces almost 70% of the world’s cacao.Here’s a summary explaination from the Financial Times:
Traders are bracing for a jump in the price of cocoa on Monday, after the internationally recognised president-elect of Ivory Coast imposed a one month export ban in an attempt to oust Laurent Gbagbo, who the international community said lost elections though he remains president.
Cocoa is the main source of income for the government of Ivory Coast and any stoppage in exports would cut the funding Mr Gbagbo relies on to pay loyal civil servants and the military. Diplomats believe he needs about $150m a month.
Any reduction in supply is likely to push the price of the commodity used in chocolate towards a 30-year high because Ivory Coast accounts for about 40 per cent of global cocoa exports. The cocoa market closed on Friday at a 6-month high of £2,114 per tonne and traders fear prices could jump as high as 10 per cent on opening on Monday.
Ivory Coast President-elect Alassane Ouattara says President Laurent Gbagbo, who refuses to give up power and acknowledge losing the November election, is stalling for time to arm himself. Ouattra is recognized by the rest of the world as having won the national election in November.
Commerce has ground to a halt in Ivory Coast and more than 260 people have been killed by violence that has gripped the country since the election, according to reports by Bloomberg.
Sources: GEI News, Financial Times, VoA News, cacaoweb.net and Bloomberg.
