Cocoa on Europe's cash market ended the week unchanged, awaiting news of the quality of the main crop in Ivory Coast, the world's top producer, traders said. Ivory Coast differentials were about 50 pounds ($81) over London nearby cocoa futures contracts, unchanged from last week even though several traders reported heavy sales of stockpiles built up during conflict in the West African country earlier this year. Ghana differentials were 100 pounds over London nearby futures.
"There was a big selloff this week. We assume people were selling stocks piled up during the crisis in Ivory Coast," one trader said. "But the market is not driven by fundamentals, it is driven by macroeconomic data." Ivory Coast's cocoa industry was at a standstill for several months after a disputed presidential election triggered an export ban, but ideal weather in West Africa helped produce a bumper 2010/11 crop.
A world cocoa surplus of 325,000 tonnes is expected in 2010/11, the International Cocoa Organisation (ICCO) said in its quarterly bulletin. This is up from the previous estimate of 187,000 tonnes and shows a considerable shift in the market from the deficit seen in 2009/10 of 102,000 tonnes, after a 2010/11 production rise of more than 15 percent.
"We haven't had much news on the main crop quality in Ivory Coats so far," another trader said. "The market is keen to get more information." Farmgate cocoa prices in Ivory Coast's main cocoa regions climbed last week as up-country traders resumed buying after the summer break and sought to meet high demand for quality beans at the ports.
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