Spiraling Ivory Coast Violence Sends Cocoa To 32-Year High

NEW YORK (Dow Jones) - Growing international concern that the major producers of cocoa in Ivory Coast is tottering into a civil war caused futures prices to more than three decades of high on Thursday.
The increase in violence between forces loyal to the current leader Laurent Gbagbo and civilians who oppose his government is the damping possibilities for robust crops this season will be the country that supplies more than a third of cacao the world.
More than 360 people have died since the disputed November 28, 2010 elections that sparked the crisis, according to the UN.
Alassane Ouattara, the winner of elections internationally recognized, has introduced a ban on exports of cocoa to cut off funding to the government of Gbagbo. commodity firms like Cargill Inc. and Barry Callebaut AG (BARN. EB) suspended operations in response.
The benchmark price of May futures settled Thursday $ 69, or about 2% higher than $ 3,733 a tonne, its highest price since January 1979, the IntercontinentalExchange trade.
The world cocoa supplies are expected to reach a surplus of 119,000 metric tons this year compared with a deficit of 66,000 metric tons in the 2009-10 season, the London-based International Cocoa Organization, said earlier this week.
2010-11 is forecast global production of 3,938,000 tons, up 8% from the previous season, but operators and industry players focus on whether a significant portion is exported from Ivory Coast, where the possibility of casting to lose the grain growing.
Analysts estimate about 400 more. 000 tonnes of cocoa in the country are still largely tied in storage.
While prices have risen 37% in New York since the November elections, some analysts warn of a sharp drop if the export ban is lifted.
"The only thing that keeps these prices so far is the political situation in Ivory Coast," said Tom Mikulski, senior market strategist at Lind-Waldock in Chicago. "Fear premium is being pumped into the market. As soon as the fear is gone, the price is deflated quickly."
If the political situation is not resolved soon, could have implications for the 2011-12 crop, planted between May and July.
"They have raised concerns about the future of the harvest of next year, especially given that violence may spread during the growing season and Gbagbo can still terrorize the country," said Clinton, James Francis, an analyst at Eurasia Group.
Security forces loyal to Gbagbo shot and killed six women at a rally in favor of Ouattara on Thursday, Agence France-Presse.
"The moral bankruptcy of Laurent Gbagbo, it is clear that its security forces killed demonstrators and women of his country runs out of resources", USA State Department spokesman, Philip Crowley, said in Twitter.
Funding for the harvest is also in doubt. During the past three weeks, Gbagbo took to the local units of the French banks Societe Generale SA (GLE.FR) BNP Paribas SA (BNP.FR) Standard Chartered UK PLC (STAN.LN) and the U.S. bank Citigroup Inc. (C).

(Source: http://online.wsj.com/article/BT-CO-20110303-715950.html)