ABIDJAN, March 7 (Reuters) - Hot weather and patchy rains last week in Ivory Coast's main cocoa growing regions were favourable for development of the mid-crop harvest, farmers and analysts said on Monday.
The October-to-March main crop in Ivory Coast, the world's top cocoa producer, is tailing off and farmers are now eyeing the mid-crop which runs from April to September.
Farmers said the weather has been good since the start of the year compared with the previous season and continued rains this month would be key to volumes and quality.
In the centre-western region of Daloa, producing a quarter of Ivory Coast's national output, farmers reported a mixture of abundant downpours and sunshine spells.
Farmers said the state of plantations indicated that the mid-crop's first beans would be available in the first half of April, but at least one abundant rain per week was needed to strengthen the quality of the beans.
"It has been regularly hot and we had a big rain last night. Its a very good scenario for development of the mid-crop," said Marcel Aka, a farmer in Daloa.
"We now need rain each week in order for the quality to be good at the start of the harvest in April," he said.
In the western region of Soubre, at the heart of the cocoa belt, one analyst reported 27 millimetres of rain last week.
Farmers said they were satisfied and the weather was paving the way to an abundant crop compared with last season, with some pods potentially rady for harvest by the ed of March.
"There has been good rain. The weather conditions have been very good this year and the mid-crop harvest could start early," said farmer Koffi Kouame.
In the eastern region of Abengourou, about 11 millimetres of rain was reported. Farmers said trees showed plenty of small pods and the rainfall boosted expectations for the mid-crop.
"The rain has reassured us. There will be lots of cocoa," said farmer Denis Kablan.
No rain was reported in the southern and coastal regions of Agboville, Aboisso, Divo, San Pedro or Sassandra, but farmers said growing conditions remained generally good.
source: http://af.reuters.com/article/ivoryCoastNews/idAFLDE72615C20110307
Monday, March 7, 2011
Cocoa Processors Groan as Cocoa Price Hits Record Level
Lagos — Except there is some intervention from government, several cocoa processors would be out of business in the next few months as the price of the commodity continues to rise as foreigners with cheap money gain direct access to the Nigerian market. An embittered President of the Cocoa Processors Association of Nigeria, COPAN, Mr. Akin Olusuyi told LEADERSHIP in a telephone interview that the price of cocoa was unreasonably high and capable of forcing many out of busines
He thundered from his Ondo office "As I talk to you now, cocoa is going for N600,000 per ton and this price is unreasonable, yet government is not doing anything about it"
The price of cocoa has shot up sharply since November when gladiators in the Ivorien crisis returned to the trenches after incumbent President Laurent Gbagbo refused to step down for Alhassane Quattara widely believed to have won the Presidential elections.
Cote d "Ivoire is the world's leading producer of cocoa, providing 38 percent of the global production. The crisis in the country caused a disruption in the production and fired up prices But while other cocoa producing nations in the region like Ghana and Cameroun are reaping from the crisis in Cote d' Ivoire, the situation is bitter pill for Nigerians.
Olusuyi blamed government for the misfortune the cocoa processors in the country are facing. He argued "The government has no policy as far as cocoa is concerned. For example they make the cocoa sector an all comers affair.
Olusuyi said unlike in Nigeria, " the cocoa economy in Ghana is well structured and the local operators are protected from foreign invasion" The COPAN chief revealed that foreigners all allowed to have unrestrained access to the cocoa farms in Nigeria.
"What is happening here in Nigeria cannot happen in Ghana. Because we do not have a structure and they have a structure they regulate the cocoa business in such a way that foreigners do not have unrestrained access to the farms. It is only in Nigeria that you see foreigners entering the farms, it can never happen in Ghana.
The COPAN chief executive who runs his cocoa processing facility in Ile Oluji in Ondo State said the major challenge facing the processors is the invasion of the business by foreigners.
"There is no way we can compete with the foreigners who take loans abroad with very little interest rate while we take loans at a cu throat interest rate. Yet these foreigners are allowed to go straight into the farms." He also spoke of other factors threatening the very existence of processors "Apart from this fierce competition we are facing, we are also confronted with the problem of infrastructure, power, now the price of diesel is rising everyday, so the problems are mounting by the day"
He lamented the role of government in their plight and painted a bleak future for the sector "It is clear that government is not serious about agriculture, there is no policy in the first place so over the last decade the country has been retrogressing in cocoa and the retrogression would continue".
http://allafrica.com/stories/201103070838.html
Kenya coffee prices delight farmers, dismay buyers
* Weather, global market boosts prices
* Buyers turn to other producers regionally
Record high commodity prices have rattled finance ministeries in the West, but poor growers see things differently -- especially in Kenya where reforms now mean more profits trickle down to them.
Coffee from the local co-operative society fetched $1,011 per 50-kg bag in January, a heady price for any coffee farmer around the world.
"Now you can build a house, you can pay school fees, you can buy inputs. Before this, you couldn't do any of that," said Duncan Kimani, 52, pruning excess twigs off bushes with green berries that will be ready for harvest in April.
Kenyan coffee prices have hit records this year -- climbing as high as $1,022 per bag -- because of high prices internationally and on a squeeze in the local supply.
But that has a double edge: encouraging farmers to pay more attention to their coffee but are also deterring buyers, who are turning to specialty beans from other countries in the region.
Small-scale coffee farmers complain perennially that they do not receive the rightful share of earnings, with the bulk going to middlemen such as millers or exporters.
Some have neglected their coffee trees or chopped them down altogether and taken up dairy farming in frustration at years of hard toil with no returns.
But government-led reforms may be finally taking root and turning around the lot of some farmers. According to new rules, co-operatives can keep only 20 percent of net sales and must pass on the rest to farmers.
Growers are also replacing corrupt co-operative officials that siphoned their cash, which is also beginning to bear yields in places such as Komothai.
"Farmers are very proud that we managed $1,011 per bag," said Moses Mbugua, a member of Gathiruini factory, one of the 13 factories that makes up the Komothai's growers society.
"Farmers have agreed to go back to tending their coffee farms to get a good crop."
Gathiruini factory paid farmers 44.60 shillings for every kg of raw cherry they produced after selling clean AA grade coffee at $275 per bag.
VAGARIES OF WEATHER
Neighbouring Githongo factory paid out paid 60.70 shillings having sold their early crop at $436 for each bag.
Farmers are now eagerly anticipating healthy returns from the higher prices from the main crop, including the $1,011 sold earlier this year.
"Ten years back 10 shillings was the best you could get for a kg of cherry," said farmer Kimani. "We have hope now the coffee industry will change."
But the high prices have a downside. They deter regular buyers and are affordable only to specialty roasters that sell single-origin coffee.
"Roasters are keeping off our coffee and a lot of them are turning to mild arabicas from the region, which are way cheaper," said Isaac Muchomba, executive secretary at the Kenya Coffee Traders Association (KCTA).
"We've actually seen roasters who buy top end not buying at all."
Excessive rain at the start of 2010 -- normally a dry season necessary for flowering -- hampered growth and is the reason for the low quantity of beans available for sale.
Coffee formed then was harvested over September-December and is in the market now.
The International Coffee Organisation expects unfavourable weather conditions in major coffee-producing regions to increase the global supply uncertainty.
Kenya's coffee production contracted by about 26.6 percent to 42,096 tonnes in the season concluded in September 2010, according to KCTA statistics.
The Nairobi Coffee Exchange that conducts weekly sales may break off as early as April for an annual month-long recess that normal takes place in July-August, KCTA said.
"The climate has changed so much that there is no clear season any more when the flowering or the harvesting will take place," said Muchomba. "Some estates are harvesting all the time." (Editing by William Hardy)
http://af.reuters.com/article/burundiNews/idAFLDE70O13O20110307?pageNumber=4&virtualBrandChannel=0
Fighting erupts in Ivory Coast
Heavy fighting has broken out near Ivory Coast's border with Liberia between forces backing political rivals who both claim to be Ivorian president, panicking tens of thousands of refugees who had already fled the violence.
Saah Nyuma, the deputy director of the Liberia Refugee Repatriation and Resettlement Commission, said he heard the sounds of explosions coming from Ivory Coast, with at least one mortar shell falling on the Liberian side of the border on Sunday.
A fighter who asked not to be named for fear of reprisals said the violence was taking place in the border village of Toulepleu.
Analysts fear that Ivory Coast's political crisis following the disputed presidential election will spill over into full-blown civil war - nearly 400 people have been killed since the November 28 vote, according to the UN and Associated Press.
The UN refugee body says more than 200,000 people have fled fighting in the main city of Abidjan in the last week, and more than 70,000 have crossed the border into Liberia to avoid fighting in the country's west.
The UN declared Alassane Ouattara the winner of the election, but sitting president Laurent Gbagbo refuses to cede power after more than a decade in office. His security forces are accused of abducting, torturing and killing political opponents.
Over the weekend, gangs of young people aided by uniformed police ransacked at least 10 houses in Abidjan belonging to officials allied with Mr Ouattara.
"They're trying to install an atmosphere of terror," said top Ouattara adviser Amadou Coulibaly. "But you can't do more than what they've already done - firing on unarmed women. They're getting desperate."
Governments around the world swiftly condemned last Thursday's killings of six female demonstrators.
Foreign Office Minister for Africa, Henry Bellingham, said he was "deeply concerned" about the deteriorating security situation in Ivory Coast and was "appalled" to hear that women were killed during a peaceful demonstration.
source: http://www.google.com/hostednews/ukpress/article/ALeqM5i3JZCOfAqME1NLpZ0TbuIDQkUC-Q?docId=N0335141299490703508A
Good bye fundamentals, large funds drive commodities!
By Sreekumar Raghavan
We all learnt in our basic economics lessons that price is a function of demand and supply. If supply and demand is all that matters in economics, you can teach this discipline to even parrots, they say. So economists came up with different other variables (often mathematical to make it incomprehensible to laymen) that may affect prices and created new models.
However, it looks like the traditional Economic Theory is insufficient to explain price behaviour of commodities in an era dominated by futures trading worldwide. The text book theories were created when futures trading hadn't attained such huge volumes nor the financial markets had this kind of depth. When crude oil prices shooted to $150 levels two years ago, the blame was entirely put on speculation not fundamentals. When natural rubber prices recently rose to Rs 250 and above in Indian markets, the blame was put on futures trading which is driven by speculation. One expert panel headed by a chief minister of western Indian state of Gujarat has recommended ban on futures trading in essential commodities.
One view is that millions of dollars are being pumped into commodities by hedge funds, ETFs and financial markets as return from other investments dwindled. The European Commission has pointed out that while global metals and minerals markets generally follow a cyclical pattern based on supply and demand, the 2002-2008 period was marked by unforeseen high prices triggered by soaring demand in emerging countries.
"Currently, worldwide consumption is picking up after a slowdown due to the economic and financial crises, and is forecast to grow steadily in the coming years, due to continued strong demand from economies such China and India. However, in recent years, commodity markets have experienced increased volatility and unprecedented price movements that cannot always be linked to changes in supply and demand."
"This trend can be perceived in all major commodities, including energy, metal, mineral, agriculture and food markets. And there is a growing consensus that excessive speculation on commodity derivative markets plays a major role in spurring volatility."
Sujiro Seam, deputy director for food security and economic development at the French Foreign Ministry points out that such volatilities mean a disconnect between price evolution and fundamental elements of the markets. Thus acutal production, consumption or stocks of commodities no longer determine the prices.
Take the case of the $4 bn exchange-traded fund PowerShares DB Agriculture Fund, that tracks 11 commodities from corn to soybeans and cattle. Corn, soybeans, sugar and live cattle together account for half of the funds value, other holdings include cocoa, coffee, hogs, wheat and corn. As in gold, silver and metals, in agriculture too, the activity by major funds are being blamed for volatility in prices.
These are the conventional determinants of demand follow:
1. Income 2. Tastes and preferences 3. Prices of related goods and services 4. Buyer's expectations about future prices 5. Number of Buyers
Now a sixth determinant can be added- the amount of speculation in a specific commodity created by inflows from financial markets.
Therefore, experts have advocated greater transparency in financial markets to curb speculation in commodities and check price volatilities. The legendary George Soros in an article published in the Financial Times pointed out that Dodd-Frank Act passed by US Congress in July 2010 will pave the way for mining and exploration companies to report how much they paid to governments by way of royalties and other expenses in the nations in which they operate. This in turn will force the government in those countries to utilise the proceeds from natural resources to raise the social welfare measures for its citizens including access to schools, sanitation, public health, roads and market access.
The significant question that now emerges is whether to dump our old price theory? May be the next Nobel Prize awaits the one who actually builds a good case study of financial markets, futures trading and its impact on commodities.
http://www.commodityonline.com/news/Good-bye-fundamentals-large-funds-drive-commodities!-36987-3-1.html
COFFEE AND COCOA FORECAST FOR TODAY AND MARKET CLOSING REVIEW 5 marc 2011
* Ivorian fighting nudges cocoa to new highs
* Arabica coffee tops 34-yr high, but falls late
* ICE sugar collapses late on stop-loss sales
U.S. cocoa and coffee futures vaulted to over 30-year highs Friday but profit-taking and a wave of
liquidation dragged both goods into mostly negative territory by the end of the session.
A virtual civil war in top cocoa producer Ivory Coast powered bean futures and a shortage of high-quality beans spurred arabica coffee.
Sugar futures were hit hard as well. The volume of business in U.S. soft commodity markets ran well below their 30-day norms, with raw sugar and cocoa about a quarter below and arabica coffee a third-below the averages, Thomson Reuters preliminary data showed.
New York's May cocoa contract fell $76 to settle at $3,657 per tonne, having posted a new 32-year intra-day peak at $3,775. Liffe's May cocoa contract lost 56 pounds to finish at 2,340 pounds per tonne.
ICE's May arabica coffee futures fell 1.65 cents to close at $2.728 per lb, having hit a 34-year intra-day high at $2.792. London's May robusta coffee was up $8 to end at 2,390 per tonne.
"It (coffee) did make a new historical high today, which is significant, but there's no new news. It's more about the lack of selling from origin than anything else," Marcio Bernardo, trader with Newedge USA, said of arabica coffee futures.
Market turned lower on profit taking too, he said. "There's not much volume here so you have to take this movement with a grain of salt," he said.
ICE cocoa futures rumbled to a 32-year high, despite forecasts of a surplus of cocoa beans in the market, driven by the prospect supplies may dry up due to the Ivorian crisis. The trade was also concerned over prospects for Ivorian mid-crop supplies due to the violence.
"People believe the mid crop could be disrupted," said Keith Flury, a senior analyst with Rabobank in London.
Constraints on bank liquidity and security fears could also dissuade Ivorian growers from harvesting, dealers said.
The May/July spread in New York and London cocoa futures contracts <0#LCC:> <0#CC:> remained at a steep premium, an indication of tight supplies or worries Ivorian cocoa may be continue to be severely constrained by the fighting there.
Nick Gentile, the head of trading operations in commodity firm Atlantic Capital Advisors, characterized the selling which hit the complex as likely "profit-taking."
"Once that short-covering music stops, the profit taking comes in and falls into a hole," Luis Rangel, vice-president for commodity derivatives with ICAP North America in Jersey City, said, adding the advance seen "were short-covering driven."
Another dealer said: "It looks like one of these funds decided they wanted to short the market going into the weekend and dumped their positions across the board. There is really no news out there that triggered it. In fact, there has been no change in the bullish fundamentals for cocoa, sugar and coffee at this time."
The impact on the cocoa market was not as harsh and that may be because of the daily gunbattles in Ivory Coast and the virtual state of civil war in a country, which accounts for 40 percent of world supplies of cocoa beans.
ICE's May arabica coffee futures
"It (coffee) did make a new historical high today, which is significant, but there's no new news. It's more about the lack of selling from origin than anything else," Marcio Bernardo, trader with Newedge USA, said of arabica coffee futures.
Market turned lower on profit taking too, he said. "There's not much volume here so you have to take this movement with a grain of salt," he said.
ICE cocoa futures rumbled to a 32-year high, despite forecasts of a surplus of cocoa beans in the market, driven by the prospect supplies may dry up due to the Ivorian crisis. The trade was also concerned over prospects for Ivorian mid-crop supplies due to the violence.
"People believe the mid crop could be disrupted," said Keith Flury, a senior analyst with Rabobank in London.
Constraints on bank liquidity and security fears could also dissuade Ivorian growers from harvesting, dealers said.
The May/July spread in New York and London cocoa futures contracts <0#LCC:> <0#CC:> remained at a steep premium, an indication of tight supplies or worries Ivorian cocoa may be continue to be severely constrained by the fighting there.
Nick Gentile, the head of trading operations in commodity firm Atlantic Capital Advisors, characterized the selling which hit the complex as likely "profit-taking."
"Once that short-covering music stops, the profit taking comes in and falls into a hole," Luis Rangel, vice-president for commodity derivatives with ICAP North America in Jersey City, said, adding the advance seen "were short-covering driven."
Another dealer said: "It looks like one of these funds decided they wanted to short the market going into the weekend and dumped their positions across the board. There is really no news out there that triggered it. In fact, there has been no change in the bullish fundamentals for cocoa, sugar and coffee at this time."
The impact on the cocoa market was not as harsh and that may be because of the daily gunbattles in Ivory Coast and the virtual state of civil war in a country, which accounts for 40 percent of world supplies of cocoa beans.
Liffecoffee and cocoa ends lower as supply concerns ease
* Liffe May cocoa ends off 56 pounds at 2,340 pounds a tonne, having earlier touched a seven-month high of 2,425 pounds. Dealers continued to eye conflict in top grower Ivory Coast. There was comparative calm on Friday after a week of clashes, which had brought to country close to civil war.
Coffee and cocoa hit news highs, but sputter into close
* Ivorian fighting nudges cocoa to new highs
* Arabica coffee tops 34-yr high, but falls late
* ICE sugar collapses late on stop-loss sales
U.S. cocoa and coffee futures vaulted to over 30-year highs Friday but profit-taking and a wave of
liquidation dragged both goods into mostly negative territory by the end of the session.
A virtual civil war in top cocoa producer Ivory Coast powered bean futures and a shortage of high-quality beans spurred arabica coffee.
Sugar futures were hit hard as well. The volume of business in U.S. soft commodity markets ran well below their 30-day norms, with raw sugar and cocoa about a quarter below and arabica coffee a third-below the averages, Thomson Reuters preliminary data showed.
New York's May cocoa contract fell $76 to settle at $3,657 per tonne, having posted a new 32-year intra-day peak at $3,775. Liffe's May cocoa contract lost 56 pounds to finish at 2,340 pounds per tonne.
ICE's May arabica coffee futures fell 1.65 cents to close at $2.728 per lb, having hit a 34-year intra-day high at $2.792. London's May robusta coffee was up $8 to end at 2,390 per tonne.
ICE's May arabica coffee futures
The impact on the cocoa market was not as harsh and that may be because of the daily gunbattles in Ivory Coast and the virtual state of civil war in a country, which accounts for 40 percent of world supplies of cocoa beans.
The sugar market is focused on the imminent start of cane harvesting in the centre-south of Brazil, the world's top sugar producer and exporter, which traders said could put pressure on sugar prices going forward.
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