Cocoa cost surge sparks fear of soaring prices

10 February, 2012
Page 10 

Fears are growing that cocoa prices are set to soar in 2012 after instability in Africa caused a surge in costs at the beginning of this year.

The commodity's price had been falling in the second half of 2011, but political changes in the Ivory Coast one of the market leaders for cocoa production saw the price rise by $111 (£70.07) per tonne or 5% from December to January, according to the International Cocoa Organisation (ICCO). The African country has sent the commodities market into turmoil after it recently launched a series of auctions to sell part of its 2012-2013 crop early as part of an overhaul for the industry.However, much of the auction activity has been veiled in secrecy, with Ivory Coast's coffee and cocoa board only saying that the auctions went "very well" and that has caused distress in the trading of the commodity.

Plus, there are further fears of under production in the year ahead, another factor that will impact price in 2012, as well as concerns over increased demand from Asia. Agricultural lender Rabobank warned: "Futures have retraced after the market oversold and we see further strength on output concerns."

Commenting on the situation in the Ivory Coast, Rabobank added: "The move adds to the uncertainty about the government's growing involvement in the cocoa market and increases market price volatility in the short term."

l For future trends on chocolate in bakery see pages 26 & 27.





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