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Cocoa Export Ban Sends Cocoa Prices Surging, Ivory Coast Violence Expected

Tyler Durden's picture





 

As we highlighted yesterday, and predicted a week ago, following the Ivory Coast's halt of cocoa exports, futures in the substance have moved to one-year highs on Monday as "ongoing political tensions in the
world's top producer escalated." The WSJ reports that "New York ICE second-month cocoa futures soared more than 4% to a
one-year high of $3,340 a metric ton. In London, front-month March
futures jumped 7% at the open to a five-month high of GBP2,307/ton
($3,692/ton)." We hope that our prediction that JP Morgan is the mastermind behind this most recent key commodity market implosion, made surely in jest, remains that way and that no cocoa ETF is currently being prepared by JPM without anyone's knowledge, until it is of course, too late.

From the WSJ, as to why yet another food price-based conflict is imminent:

On Saturday, the Central Bank of West African States forced an ally of presidential incumbent Mr. Gbagbo to resign, effectively handing the country's purse strings to Mr. Ouattara, who is recognized by most foreign countries as having won a presidential run-off at the end of November.

Dealers said investors are scrambling to take cover in the futures markets as uncertainty over supplies mounts ahead of Easter, when demand for the key chocolate ingredient is high.

"Hearing the words 'export ban' applied to the top cocoa producer has got people worried," said a London-based broker. "Everybody's trying to get some protective buying in."

Ivory Coast is the world's largest cocoa exporter, accounting for about 40% of the world markets. The cash crop is grown mainly by small-holder farmers with less than a couple of hectares of land, yet exports provide almost one-third of the country's gross domestic product. Farmers are expected to produce a bumper crop of around 1.3 million tons this year due to clement weather.

Observers now fear the current export ban could fuel a fresh wave of violence in the West African country. At least 260 people have been killed since the disputed Nov. 28 presidential vote and many in the international community now fear the country may be on the brink of a return to the civil war that ripped it apart from 2002.

Kona Haque, commodities analyst at Macquarie, said international exporters are likely to abide by Mr. Ouattara's dictat in the hope of currying favour with the future leader.

"They'll want to be on the right side of him if ultimately he's going to be the president," she said. "It all depends on how much the industry needs cocoa right now. If they don't have enough they'll find a way to get it out."

And the funny thing is that the cheap liquidity demand side speculators did not even yet enter the cocoa market. We expect that to happen soon enough.

 


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Mon, 01/24/2011 - 08:50 | Link to Comment Oh regional Indian
Oh regional Indian's picture

Now the TPTB have done it. if enough members of the fairer sex get angry, watch out.

Hell hath no fury like a woman facing higher prices for 90% dark.

ORI

http://aadivaahan.wordpress.com/2011/01/21/accidental-lives/

Mon, 01/24/2011 - 08:53 | Link to Comment Dan The Man
Dan The Man's picture

-----

I'm going to need something stronger for the missus...like maybe heroine.

Mon, 01/24/2011 - 09:40 | Link to Comment Rodent Freikorps
Rodent Freikorps's picture

Not a hero?

Mon, 01/24/2011 - 09:48 | Link to Comment attst487
attst487's picture

Just give some hopium and everything will be ok.

Mon, 01/24/2011 - 08:55 | Link to Comment JonNadler
JonNadler's picture

Comrads we have glorious news for you! the chocolate ration will be raised to 100 mg a week.

Wait but it was 150 last week

Mon, 01/24/2011 - 09:01 | Link to Comment umop episdn
umop episdn's picture

Report to the Ministry of 'Love' immediately after the two-minute-hate period is over.

Mon, 01/24/2011 - 08:57 | Link to Comment Sudden Debt
Sudden Debt's picture

I BET JPM IS BEHIND THIS CHOCOLAT CACAO PRICE MANIPULATION!!!

BUY PHYSICAL CHOCOLAT!!!

 

BEST INVESTMENT EVER!!

Rumor has it that consumption is almost as high a the production! THERE ARE ALMOST NONE LEFT IN THE VAULTS!!!

 

AND YES! YOU CAN EAT IT!!!!!

 

 

Mon, 01/24/2011 - 20:23 | Link to Comment StychoKiller
StychoKiller's picture

Watch out for those chocolate-covered tungsten bars! :>D

Mon, 01/24/2011 - 08:56 | Link to Comment SashaBelov
SashaBelov's picture

Still time to buy May 11 future?

Mon, 01/24/2011 - 08:58 | Link to Comment Sudden Debt
Sudden Debt's picture

BUY PHYSICAL AND KEEP IT IN YOUR POCKET!!

Mon, 01/24/2011 - 09:01 | Link to Comment savagegoose
savagegoose's picture

but dont try smuggling out the country up your ass

Mon, 01/24/2011 - 09:41 | Link to Comment Sudden Debt
Sudden Debt's picture

as long as you can keep it liquid there isn't a real problem when you store it in your ass but it doesn't guarantee a 0.999 pure form...

Mon, 01/24/2011 - 09:08 | Link to Comment gold mining ceo...
gold mining ceos are idiots's picture

London trader Anthony ward started buying Cocoa in large quantities mid 2010. Then we had an election...anybody read the bio on the guy who is supposed to have won? Oh yes, he is a banker. 

So now, we get this wonderful situation where the London trader Mr. Ward is able to reap a fortune on the backs of what certainly appears to be Economic Hitman 101.

Mon, 01/24/2011 - 09:08 | Link to Comment ak_khanna
ak_khanna's picture

The only thing driving up commodity prices are speculator­s armed with cheap money and super fast computers. This is causing a havoc in the lives of rest of the population and pushing them towards poverty as they can no longer afford the basic necessitie­s of life.

Regulators are too slow to react and take ages to identify and take measures to solve the problems.

Total ban on speculatio­n is strictly required all over the world to bring relief to the common man.
http://www­.marketora­cle.co.uk/­Article245­81.html

Mon, 01/24/2011 - 09:18 | Link to Comment Theos
Theos's picture

So whos going to take the other side on hedges? The government?

Mon, 01/24/2011 - 10:18 | Link to Comment Grappa
Grappa's picture

F**k hedges, speculators and for that matter a large chunk of "investors". Only physical allowed in ANY (including oil bitches) commodities, period. Those of you who might fab fab about price finding or setting, UP YOURS. This market doesn't know shit about prices only huge chunks of "free moneyyy". Unless "real prices" are in the range of LD50 by the people, for the people.

 

Mon, 01/24/2011 - 09:15 | Link to Comment robobbob
robobbob's picture
7/18/2010 anyone remember this?
"A British businessman has purchased Europe’s entire cocoa supply" British businessman Anthony Ward, 50, was revealed on Sunday to be behind the massive cocoa purchase, the Daily Telegraph reports. Mr. Ward is worth about $58-million and is the co-founder of a hedge fund that co-ordinated the sale. Mr. Ward is the former chairman of the European Cocoa Association and now owns more than 15% of the world’s cocoa supply. He made a similar deal in 2002 when he bought a huge cocoa supply and subsequently watched prices increase. His intentions for his monopoly on Europe’s cocoa supply are still unknown.
http://news.nationalpost.com/2010/07/18/europes-entire-cocoa-supply-bought-out-analysts-suspect-market-cornering/ any updates?
Mon, 01/24/2011 - 09:26 | Link to Comment Leo Kolivakis
Leo Kolivakis's picture

Right in time for Valentine's Day! -)

Mon, 01/24/2011 - 09:26 | Link to Comment Xibalba
Xibalba's picture

Just call JPM to smother the price with unbacked paper assets. 

Mon, 01/24/2011 - 09:36 | Link to Comment Manipulism
Manipulism's picture

FOFOA should write something about FREECOCOA immediately.

Mon, 01/24/2011 - 09:38 | Link to Comment Manipulism
Manipulism's picture

Crash JP Morgan, buy chocolate!

Mon, 01/24/2011 - 10:31 | Link to Comment Bubbles...bubbl...
Bubbles...bubbles everywhere's picture

We need a Max Keiser chocolate bar.

Mon, 01/24/2011 - 10:50 | Link to Comment qrad
qrad's picture

A friend of mine already made a Ron Paul chocolate coin:

http://ronpaulchocolate.com/

"When the feds come, you can eat the evidence."

Mon, 01/24/2011 - 10:35 | Link to Comment qrad
qrad's picture

NYSE:DBA is holding ~30% Cocoa futures. 

Mon, 01/24/2011 - 13:17 | Link to Comment cranky-old-geezer
cranky-old-geezer's picture

Sacrificing bondholders to corner the cocoa market ...with SEC blessing.  

Business as usual in our banana republic.

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