Cocoa May Gain as Ivory Coast Unrest Heightens Shortage Risk; Coffee Falls

Cocoa may advance in London on speculation extended unrest in the Ivory Coast, the world’s largest cocoa producer, heightens the risk of a bean shortage next season. Coffee and sugar declined.

Thousands of supporters rallied in Abidjan over the weekend in support of incumbent President Laurent Gbagbo, who has ordered cocoa exporters to ship beans or face sanctions. RivalAlassane Ouattara, the internationally recognized winner of Nov. 28 presidential elections, has imposed an export ban. Cocoa supplies will exceed demand this season, according to the International Cocoa Organization.

“The market is concerned that we may tip into a deficit if a potential war affects the next main crop,” said Keith Flury, an analyst at Rabobank International in London. The Ivory Coast’s main crop usually starts in October.

Cocoa for May delivery was little changed at 2,111 pounds ($3,372) a metric ton at 11:52 a.m. on NYSE Liffe in London. Cocoa for May delivery fell $17, or 0.5 percent, to $3,225 a ton on ICE Futures U.S. in New York.

Ouattara ordered the export ban until March 31. The surplus for the current season that ends Sept. 30 is estimated at 119,000 tons, after a shortage of 66,000 tons a year earlier, the ICCO estimated on March 1.

Bigger Crop

The Ivory Coast’s crop is supposed to be 6.7 percent larger this year, helping to keep the market in surplus, according to the International Cocoa Organization. The country’s production will be 1.325 million tons, up from 1.242 million tons last year, the ICCO said.

Robusta coffee futures for May delivery dropped $16, or 0.7 percent, to $2,426 a ton in London. Robusta coffee may rise to $3,000 a ton in the next two months because supply from Vietnam, the biggest grower, will decline at a time when demand from roasters is accelerating, according to F.O. Licht analyst Stefan Uhlenbrock.

Arabica coffee for May delivery fell 3.05 cents, or 1.1 percent, to $2.6555 a pound in New York.

White, or refined, sugar futures for May delivery dropped $1.40, or 0.2 percent, to $710.40 a ton in London. Raw-sugar futures for May delivery declined 0.07 cent, or 0.3 percent, to 27.79 cents a pound on ICE. Indonesia has secured about 65,000 tons of white sugar imports for the first quarter, or about 14 percent of the 450,000-ton import quota allowed for household consumption, F.O. Licht said in a report.

(Source: http://www.bloomberg.com/news/2011-03-28/cocoa-may-climb-in-london-as-unrest-heightens-risk-of-shortage.html)