Cocoa regulator seeking compensation from defaulting exporters
Local exporters can’t honor deals for 350,000 tons of beans
Ivory Coast’s cocoa regulator is facing losses of more than 200 billion CFA francs ($327 million) after local exporters defaulted on their contracts because they wrongly speculated that prices would rise, according to a person familiar with the matter.
Le Conseil du Cafe-Cacao, the industry regulator in the world’s biggest cocoa producer, is seeking compensation from exporters who couldn’t fulfill their commercial agreements, said the person, who asked not to be identified because the information is confidential. Companies and cooperatives that are in default aren’t allowed to take part in auctions for the season that will start in October unless they make payment arrangements, said the person.
The government will discuss the losses on cocoa contracts at a meeting later on Tuesday, spokesman Bruno Kone said by phone. Patrice Raux, a spokesman for the CCC, wouldn’t immediately comment when contacted by phone.
Ivory Coast sold 350,000 metric tons of beans after some shippers defaulted on their export contracts and this season’s crop turned out bigger than expected, Agriculture Minister Mamadou Sangafowa Coulibaly said last month. Shippers bought cocoa while betting that prices would continue to rise after reaching a six-year high in July.
Forecasts of an oversupply have since slashed futures prices in London by more than a third. That meant the regulator was forced to re-auction some of the beans at lower prices. A bigger-than-expected crop also resulted in more sales at lower prices.
The defaulted contracts have been completely resold, Coulibaly said Feb. 22. Support payments to exporters who bought the beans are covered by the nation’s reserve and stabilization funds, he said.
Ivory Coast will lower the minimum price paid to farmers for the smaller of the two annual crops that starts being harvested in April, the regulator said in a statement on its website. While the CCC will pay the equivalent of 60 percent of London futures values “as it has always done,” prices have dropped from 1,700 CFA francs per kilogram in October to 1,200 CFA francs per kilogram, it said.