UN envoys mull escrow for Ivory Coast cocoa revenue

UNITED NATIONS  12 march 2011- The U.N. Security Council may consider a proposal to set up an escrow account for Ivory Coast cocoa revenues to keep them out of incumbent leader Laurent Gbagbo's hands, U.N. diplomats told Reuters.

Amid fears of a new civil war in Ivory Coast, Gbagbo rejected an African Union proposal at a summit on Thursday offering him a safe exit in return for ceding power to rival Alassane Ouattara, winner of a disputed November election according to U.N.-certified results.

"An escrow account for cocoa revenues is one of the options we're considering for Cote d'Ivoire," a Western diplomat said on condition of anonymity. "In theory it could work and it's something the council can take a look at."

Another council diplomat confirmed that the idea of a U.N.-administered escrow account was under discussion for the world's biggest producer of cocoa, a commodity that is Gbagbo's main source of funds as his international isolation increases.

Cocoa Falls as Supply May Increase

Cocoa fell, capping the biggest weekly drop since May, on speculation that exports from Ivory Coast will increase after the government threatened to seize undeclared inventories.

Ivorian exporters have until March 31 to ship bean stockpiles or face “sanctions,” a spokesman for President Laurent Gbagbo said March 9. Gbagbo has refused to step down following a November election that international observers say was won by Alassane Ouattara, who has asked shippers to hold back exports as a way of denying funds to his rival. The government is also threatening to seize inventories not declared by today.

“The market is realizing there is still a lot of supply, as the situation in Ivory Coast is forcing suppliers to export in order to pay the domestic tax,” Jonathan Bouchet, an analyst at broker OTCex Group, said today by telephone from Geneva. Ivory Coast is the world’s biggest cocoa producer.

Cocoa for May delivery fell $33, or 1 percent, to settle at $3,412 a metric ton at 12:10 p.m. on ICE Futures U.S. in New York. Prices dropped 6.7 percent this week, the most since May 14.

In London, cocoa futures for May delivery lost 18 pounds, or 0.8 percent, to 2,226 pounds ($3,574) a ton on NYSE Liffe. Prices dropped 4.9 percent this week.

At least 365 people have died in political violence in Ivory Coast since the election, according to the United Nations. Gbagbo took control of local cocoa and coffee buying and exports on March 7 in a bid to force resumption of shipments.

In other hand, Global cocoa production will exceed demand by 119,000 tons in the season that started Oct. 1, compared with a shortage of 66,000 tons a year earlier, according to the London-based International Cocoa Organization.******