Price differentials in the European cash cocoa market were little changed this week as dealers sought more clarity over forward-sales auctions in Ivory Coast, the world's largest producer. "Ivory Coast forward-sales auctions confused the market," one trader said.
Ivory Coast's reform of its cocoa sector, vital for the country to obtain further debt relief, began in confusion on Tuesday as the regulator hailed the first two forward-sales auctions as a success while exporters said they had boycotted them. The auctions are part of a return to a regulated system aimed at guaranteeing Ivory Coast's farmers a price floor for their produce.
Ivory Coast differentials were about 80 pounds ($130) over London nearby cocoa futures contracts, the same as last week. Ghana differentials were 120 pounds over London nearby cocoa futures, compared with 125 pounds last week. "This week we didn't see wild moves like last week," another trader said.
Cocoa futures consolidated towards the end of the week following sharp losses after they hit their highest level since November in the previous week. Cocoa farmgate prices ticked up in Ivory Coast's main growing regions last week as the price of beans at ports rose and farmers said they were starting to see a shortage of beans up-country.
Price ratios for cocoa butter, a key ingredient in chocolate, eased as the industry was still trying to assess what will be the demand for chocolate this year. "There is still a lot of uncertainty about demand for chocolate this year and what will be the impact of this economic crisis," one trader said.
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