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Cocoa prices soar as Cote d’Ivoire , Ghana threaten supply cut

Cocoa prices rose sharply on Wednesday after key producers Ivory Coast and Ghana threatened to stop selling their products to buyers unwilling to meet a minimum price.

The threat pushed the September forward contract for the commodity, listed in New York, to $2,540 a tonne, up 1.4 percent on the day.

The two African nations, which together account for 60 percent of the world’s cocoa production, summoned buyers to Accra for a two-day meeting demanding a price of $2,600 per tonne.

At the end of the meeting, Joseph Boahen Aidoo, chief executive of the Ghana Cocoa Board, told a news conference that their demands had been accepted in principle by the participants, but that there would be a follow-up meeting to work out how to implement the agreement.

“Ivory Coast and Ghana have suspended the sale of the 2020/2021 crop until further notice for preparation of the implementation of the floor price,” he said.

Calling the move “historic”, he said that “this is the first time when the producers have called consumers and the first time whereby suppliers have called buyers to come and engage on price,” he said.

“Over the years it has been the buyers who have determined the price for the suppliers.”

Earlier, on the sidelines of the meeting, the chief of Ivory Coast’s coffee and cocoa council, Yves Kone, said the industry needed a price that amounted to “a decent compensation” for workers’ efforts.

The world’s chocolate market is worth around $100 billion, of which only $6 billion go to cocoa producers.

But Casper Burgering, commodities analyst at ABN Amro, told AFP that the current price rise may turn out to be temporary, as supply was more than sufficient to meet world demand.

Another analyst, at Commodafrica in Paris, said however that drought in Ivory Coast could lead to a shortfall in the coming cocoa harvest, putting upward pressure on prices.

Source: Dailymail (UK)

Fair Trade USA raises cocoa price minimums

Fair Trade USA will increase the floor price and fixed premium it requires companies to pay cocoa farmers under its certification system, the organization said on Tuesday.

The increase is designed to improve livelihoods in a sector that has long grappled with farmer poverty, child labor and deforestation

The nonprofit will increase its minimum price for conventional cocoa to $2,400 per tonne from $2,000. For organic cocoa, the price will be $300 over this minimum or the market price, whichever is higher at the time. The premium, which is used to fund community projects, will increase to $240 per tonne from $200.

The new pricing structure will take effect on Oct. 1, 2019.

The 20% increase in prices puts Fair Trade USA in line with the minimums set by Europe-based Fairtrade International in December, with these newly announced minimums impacting U.S.-based brands and manufacturers.

In 2018, over 22,000 tonnes of cocoa beans were sold by Fair Trade certified cocoa farmers, according to the press release. Nearly 4.8 million tonnes of cocoa were produced worldwide in 2018/19, data from the International Cocoa Organization shows.

Representatives from Ivory Coast and Ghana, the world’s top cocoa producers, are meeting in the Ghanaian capital of Accra on Tuesday and Wednesday to discuss farmer incomes. The two countries are working to better harmonize their pricing systems.

For the 2018/19 main crop, Ivory Coast set its guaranteed farmgate price at 750 CFA per kilogram (about $1.29 per kg, or $1,290 per tonne) while Ghana set its guaranteed price at 7.6 cedis (about $1.41 per kg, or $1,410 per tonne).

On Tuesday, New York futures prices settled at $2,539, an 11-month high for the contract, but prices have fallen to as low as $1,901 this year.

Source: NEW YORK (Reuters)