Cocoa prices still volatile on political unrest

- Last updated on GMT

Related tags: Ton, Cocoa

Prices for cocoa remain relatively volatile as political unrest in
Ivory Coast, that produces some 40 per cent of global cocoa crops,
keeps the market nervous.

Cocoa prices on the London futures market LIFFE closed at £863 (€1249) a ton for March 05, down from early November peak prices of £1019 (€1475) when news of a resurgence in political unrest in the African country sparked off volatility in the cocoa market.

The political situation is now calmer, with news agencies estimating that by 5 December 312,000 tons of beans had reached the ports, down 65,000 or 17 per cent from last season, according to report this week from leading industrial chocolate supplier Barry Callebaut.

"Several factors may explain such a gap: a later crop, a cash shortage upcountry which slowsdown the whole chain, insecurity and unusually heavy rains during September-November,"​ states the report.

This latest cocoa price movement upwards comes after a spate of low cocoa prices as surplus production diluted the market. In August this year the International Cocoa Organisation predicted the 2003-2004 world net cocoa crop at 3.31 million tons and total use at 3.17 million tons, resulting in a 148,000 ton production surplus.

Cocoa production in Ivory Coast is expected to drop from the 1.3 million metric tons (MT) produced in 2002-03 to about 1.2 million MT for the 2003-04 season. In 2002, the country - with nearly 6 million people dependent on cocoa crops - earned nearly $2.1 million from cocoa, a slight increase from 2001 when the crop generated about $1.9 million.

Prior to the November price spike Barry Callebaut recently reported that low cocoa prices had affected activities at the processing arm of the company. The global firm that processes some 520,000 tonnes of cocoa annually out of a market of 3.1 million tonnes has cut back on this side of the business in the last year, reflecting the low cocoa prices.

War and disease expose cocoa crops to a price volatility that scientists believe could be eased through research into genomes.

Speaking earlier this year at a cocoa symposium in Washington DC, Raymond Schnell, a geneticist at the US department of Agriculture, announced the identification of gene markers for witches' broom (Crinipellis perniciosa) resistance - one of top three diseases that devastates cacao crops and the pathogen responsible for the decimation of cacao crops in Brazil, once a leading exporter of cacao and now an importer.

The private and public sector also heard about new research into minimising pests and the spread of disease through the natural means of biocontrol. Researchers are currently investigating ways to minimise disease by identifying symbiotic organisms that inhabit the cocoa plant, while reducing the need for harsh chemical pesticides.

According to the Association of the Chocolate, Biscuit & Confectionery Industries of the EU (Caobisco) - Switzerland, coming in at 10.6 kilos, topped the 2001 graph for the highest consumption of chocolate confectionery per head per year in Europe.

Austria came in second with 9.6 kilos, followed closely by Ireland with 8.8 kilos per capita, Norway 8.6, Denmark 8.4 kilos, Germany 8.2 kilos and the UK with 7.8 kilos. Caobisco represents nearly 2000 companies in Europe that collectively turn over more that €39 billion annually.

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