Cocoa Jumps Most Since 2008 in London Following Ivory Coast Ban on Exports

Cocoa jumped the most since 2008 in London and surged in New York after the president-elect of Ivory Coast, the world’s largest producer, banned exports for a month.

Alassane Ouattara, the internationally recognized winner of a Nov. 28 election, suspended all cocoa and coffee shipments as of today to cut off funds to incumbent President Laurent Gbagbo, who refuses to stand down. The country’s main exporters agreed to the ban, Malick Tohe, an adviser to Ouattara’s government, said by phone from Abidjan yesterday.

“People are in a state of panic now,” said Eric Sivry, head of agricultural-option brokerage at Marex Financial Ltd. in London. “The industry is lobbying hard for this ban to be softer. It was a sudden, unexpected move. Cocoa that was registered for export prior to the decision should still flow out.”

Cocoa for March delivery climbed as much as 7.4 percent, the most since March 2008 in intraday terms, on NYSE Liffe in London. The contract was up 73 pounds, or 3.4 percent, at 2,221 pounds ($3,538) a metric ton at 10:39 a.m. local time.

“I don’t think exporters will totally obey the ban, but they cannot escape from that completely,” said Carsten Fritsch, an analyst at Commerzbank in AG Frankfurt. Prices may gain as much as 10 percent because of the measure, according to Hackett Financial Advisors Inc.

$3.8 Billion

March-delivery cocoa added as much as 6.6 percent, the most since October 2009, on ICE Futures U.S. in New York. The contract was last ahead $112, or 3.5 percent, at $3,296 a ton.

The chocolate ingredient has risen 19 percent in London since the vote on concern that the standoff and unrest would disrupt supply. Ivory Coast’s production is valued at about $3.8 billion at current prices, Bloomberg calculations show. Gbagbo, who was declared winner by the country’s Constitutional Council, refuses to recognize Ouattara as the winner of the vote.

The Federation of Cocoa Commerce Ltd. said it’s seeking clarification on “communications” it received about doing business in Ivory Coast.

“As can be expected in these circumstances, the trade issues involved in this respect are of a highly sensitive nature and will take time to resolve,” said the federation, which represents about 160 companies engaged in cocoa, in a statement.

Separately, Archer Daniels Midland Co. said a Dutch cocoa- processing plant will be “fully operational” in February’s “latter half” after a fire last week.

Robusta coffee for March delivery was unchanged at $2,149 a ton on NYSE Liffe. Arabica coffee for March delivery slipped 0.4 percent to $2.394 a pound in New York.

White, or refined, sugar for March delivery gained 0.3 percent to $793.20 a ton in London. Raw sugar for March delivery declined 0.4 percent to 32.19 cents a pound in New York.

(Source: http://www.bloomberg.com/news/2011-01-24/cocoa-surges-as-ouattara-bans-ivory-coast-exports-to-cut-funding-to-gbagbo.html)