Cocoa is piling up at ports and warehouses in Ivory Coast, the world’s biggest producer, after a plunge in futures prices prompted some exporters to suspend purchases.
Trucks carrying cocoa are queuing to deliver beans at inland buying stations and the largest ports in Abidjan and San Pedro, according to four shippers familiar with the matter. Some smaller exporters stopped purchasing and their larger peers are running out of storage space, leaving an estimated 125,000 tons of beans without a buyer, said the shippers, who asked not to be named because they aren’t allowed to speak publicly about the matter.
“We have been here for five days and still haven’t been able to discharge,” Moussa Doumbia, a truck driver carrying 50 tons of cocoa from the town of Abengourou, near the eastern border with Ghana, said Dec. 23 while waiting at the port in Abidjan, the commercial capital. “Exporters are refusing to buy because of a lack of storage space.”
A spokeswoman for industry regulator Le Conseil du Cafe-Cacao, or CCC, declined to comment when contacted on Tuesday.
“The government hasn’t been informed about the situation at the ports,” Bruno Kone, a spokesman for the cabinet of President Alassane Ouattara, told reporters in Abidjan on Wednesday. The agriculture ministry “hasn’t warned us yet. We will monitor the issue and we’ll let you know.”
Stocks are building after futures traded in London tumbled more than 20 percent in the past two months because of a rebound in production that’s leaving the global market oversupplied. Lower prices mean that many small exporters that didn’t lock in sales earlier in the year have now suspended purchases as they can’t afford to pay farmers the minimum price set by the government. Some large exporters can’t absorb more beans due to restrictions imposed by the CCC on the amount each company is allowed to purchase.
Ivory Coast usually sells about 80 percent of the bigger of two annual harvests before the season starts on Oct. 1. Based on those sales, it sets the price for farmers. After futures gained for the past four years and surged to the highest since 2010 in July, the nation raised the farm-gate price by 10 percent to 1,100 CFA francs ($1.74) a kilogram for this season.
“At the moment, only Cargill, Barry Callebaut, Cemoi and Olam are buying, so we are sending our trucks to their buying stations and factories,” said Jacques Sery, who runs a growers cooperative in the biggest cocoa-growing region of central-western Daloa.
Ivory Coast sells most of its beans to about 100 exporters who ship them to processors in countries including the Netherlands and Germany. Shippers range from global food traders such as Cargill Inc. to chocolate makers including Barry Callebaut AG and Nestle SA. Some beans are grounded locally.
Beans are also piling up at farms, where growers are being offered lower prices of 900 to 950 CFA francs a kilogram, said Alexis Zangbeu, member of a cooperative in Mahapleu, in the western part of the country.
“We can’t eat cocoa. We need cash,” he said. “The situation is untenable and we don’t have the means to store cocoa for a long time.”
Cocoa for March delivery fell 0.5 percent to 1,796 pounds ($2,202) a ton at 10:51 a.m. on ICE Futures Europe in London.