Low price threatens to slow Ivorian cocoa purchases

Ivory Coast's cocoa farmers may hold beans back from the market if farmgate prices continue to fall on healthy crop forecasts and relative calm in the world's top cocoa grower, industry sources said on Monday.
The price paid to farmers usually fluctuates to some degree in line with world prices and farmers are usually the first to absorb any fall as exporters and buyers offer less to protect their own profit margins.
The director of a European exporter based in Abidjan said fears of more violence around October 30, when Ivory Coast President Laurent Gbagbo's term had been due to expire, had kept prices up but they had since fallen, and further losses could slow purchases.
Prices began picking up around mid October as industry grew nervous about the potential for trouble on the streets of the riot-prone economic capital Abidjan on October 30 but fell to a low for the month the following day on the back of the uneasy calm.
London's most active December contract has since eased further from its October 31 opening level of 825 pounds a tonne, and traded around 806 pounds in Monday afternoon trade.
"If prices continue to fall and go under 800 GBP per tonne, arrivals could slow down sharply as farmgate prices will be less than 300 CFA francs (per kg). Below this rate, farmers refuse to sell their cocoa. It's a psychological level for them," he said.
Despite fears of riots or even renewed fighting, October 30 passed with little trouble. Gbagbo was maintained in power for 12 more months by a UN Security Council resolution.
"The risk of clashes in Ivory Coast is much lower now and the prices have fallen," said the director of a major exporter based in the western port city of San Pedro.
As well as the lack of violence in war-divided Ivory Coast, a strong start to the new season and good harvest prospects for both it and neighbouring Ghana, the world's no. 2 producer, have also weighed on world prices.
Exporters had estimated last week that cocoa could flow to the ports at a rate of 50,000 tonnes per week for the next two months but if farmers decide to hold on to their beans in the hope of higher prices later on, that will become difficult.