ABIDJAN: Ivory Coast's Coffee and Cocoa Council (CCC) marketing board has begun cancelling cocoa contracts which are in default and plans to resell those volumes, exporters said on Wednesday.
Exporters and traders are expecting a wave of defaults by local Ivorian firms who secured export permits at auction, wrongly speculating that prices would rise, and can now no longer afford to buy beans to fill their contracts.
Exporters in default will be held responsible for covering lost revenues caused by the resales and will be banned from forward sales auctions until they pay what they owe, according to the exporters and a CCC letter obtained by Reuters.
"The Council started sending letters to companies who are in default and normally all of those concerned will receive a letter," said Martyr Djikalou, secretary-general of GIE-PMIEX-COOPEX - one of four Ivory Coast exporter groups. "The bill is terrible ... It's impossible for us to pay that," he added.
GIE-PMIEX-COOPEX told Reuters last week that its members alone had defaulted on around 80,000 tonnes of contracts. Other exporters said they believed that, across the sector, much more cocoa was in default. No one at the CCC was immediately available for comment.
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