ModernGhana logo
07.11.2004 Business & Finance

Cocoa Prices May Extend 11% Gain

By Bloomberg
Listen to article

Nov. 7 -- Cocoa prices, which surged 11 percent in New York last week, may extend gains this week on concern renewed fighting and anti-French demonstrations in Ivory Coast will disrupt supplies from the world's biggest cocoa producer.

At least nine French soldiers were killed and 30 others were wounded in a series of air strikes by Ivory Coast warplanes on a French army camp yesterday, Agence France-Presse reported. A U.S. civilian was fatally wounded in the raid.

French President Jacques Chirac ordered the destruction of all Ivory Coast planes involved in cease-fire violations in the country. France accounts for 40 percent of a 10,000- strong peacekeeping force in the former French colony, divided since a failed coup two years ago. The West African nation of 17.3 million people produces 40 percent of the world's cocoa.

``Continued hostilities could prevent farmers from going to their fields, affecting the harvesting of food, as well as the biggest revenue-earner in the south and west -- cocoa,'' United Nations spokesman Fred Eckhard said in a statement.

Cocoa prices in New York had the biggest weekly gain in almost two years last week after government forces on Thursday bombed Bouake, stronghold of the Forces Nouvelles, the leading rebel group, and helicopters attacked the rebel-held town of Korhogo.

Cocoa for December delivery rose $65, or 4.2 percent, to a two-month high of $1,633 a ton Friday on the New York Board of Trade. The contract's $164, 11 percent gain for the week was the biggest for a most-active contract since Dec. 6, 2002.

``Prices in New York will rise further,'' said Mussadad Syahbuddin, a manager with Sinar Surya Perkasa, a cocoa-trading company in Sulawesi, Indonesia.

Supply Concern

Concern about Ivory Coast is not so much about the country's cocoa production, but roads, ports and other infrastructure along which supplies are carried, said Litha Brent, an official with the Indonesian Cocoa Association.

``People are being cautious,'' Brent said in a telephone interview. The surge in cocoa futures prices is probably temporary. Indonesia is the world's third-largest cocoa producer, ranking behind Ivory Coast and Ghana.

Earlier today, French helicopters fired warning shots to ward off tens of thousands of demonstrators heading toward the international airport at Abidjan, Ivory Coast's largest city and administrative center.

Ivorian forces closed the airport yesterday afternoon and evacuated staff, sealing off the perimeter and closing it to air traffic, citing unidentified airport workers.

Yesterday, youths chanting anti-French slogans looted and torched four French schools in Abidjan, on the Gulf of Guinea.

Civil War

The so-called Linas-Marcoussis agreement in January 2003 suspended hostilities in a civil war that has left hundreds of people dead and displaced 1 million since September 2002. Muslim rebels in the north and west battled forces loyal to President Laurent Gbagbo, a Christian they accused of discriminating against them, in the south.

The United Nations last year sent 6,200 peacekeeping troops to Ivory Coast to monitor the Linas-Marcoussis agreement. The rebels have refused to disarm until reforms promised in the cease- fire are enacted.

Rebel groups are pillaging the country, preventing it from increasing cocoa production beyond last year's 1.3 million tons, according to Philippe Djangone-Bi, Ivory Coast's UN ambassador.

Join our Newsletter