ABIDJAN (Reuters) – Ivory Coast contracts for the 2023/24 main cocoa crop between exporters and the Coffee and Cocoa Council (CCC) that could not be completed due to a bean shortage will be postponed to prevent exporters from defaulting, a CCC note seen by Reuters showed.
As traders scramble for beans after disease and adverse weather hurt supply, industry experts are predicting a large global cocoa deficit for the current season and have growing concerns for the next.
In February, the regulator’s Managing Director Yves Brahima Kone said the CCC will not default on its contracts to supply exporters despite a drop in cocoa production.
He also said some contracts could be pushed back to the mid crop’s harvest period, which has happened in the past.
According to the note dated Tuesday, export contracts for April, May and June can be postponed until the end of June and their price will stay the same.
That delay will prevent exporters and grinders from defaulting by allowing them to secure sufficient volumes to fulfil their contractual obligations.
The CCC said it will provide financial support to those who will have to buy beans at the new fixed farmgate price of 1,500 CFA francs ($2.47) per kg, up from 1,000 CFA francs/kg stipulated in the main crop contracts.
This support, which only concerns the contracts of certain exporters and grinders, will involve a cost to the CCC’s stabilisation fund, although the volumes involved are not yet known.
“This is reassuring because the fear was that we wouldn’t be able to benefit from certain measures to honour our contracts and therefore be in default,” a director of a European export company based in Abidjan told Reuters.
The director, who asked to remain anonymous, added that it was not the company’s fault that there weren’t enough cocoa beans as they bought the cocoa from the CCC, which guaranteed them the volumes.
Ivory Coast’s mid-crop output is expected to come in between 450,000 and 500,000 tons this season, down from around 555,000 tons last year.
Any main crop contract not executed by June 30 will not benefit from the measures, the note said.
($1 = 607.5000 CFA francs)
(Reporting by Ange Aboa; Writing by Anait Miridzhanian; Editing by Sharon Singleton)
