Ivory Coast to raise foreign cocoa buying permits to 400,000 tonnes

Ivory Coast will increase the volume of cocoa that can be sold to foreign buyers with no presence in the country to 400,000 tonnes a year from 220,000 tonnes, three senior government sources told Reuters on Tuesday. The move by the state Coffee and Cocoa Council (CCC) will increase direct access to Ivorian cocoa for foreign buyers such as Mars and Hershey, companies that do not have exporting operations in the West African country.
The increase in foreign buying permits is one of several measures the CCC plans to bring in to curb speculation by local exporters, two CCC sources and one Treasury source said. The CCC did not respond to a request for official comment. Some local exporters, particularly smaller domestic operators, are suffering after an unexpected increase in the price farmers receive and a slide in international cocoa prices.
Cocoa prices in London have slumped 29 percent to 1,879 pounds from a July high of 2,518 as expectations for a substantial global surplus in the 2016-17 have grown. Ivory Coast exports about 1.5 million tonnes of cocoa a year and is the world's top producer. It has licensed 93 exporters for the 2016-17 season, including large international buyers such as Barry Callebaut and Cargill with local operations.
The increase in foreign buying permits should curb speculation because the CCC markets cocoa for international contracts at a pre-determined price. It then subcontracts domestic companies to ship the cocoa at that fixed price. To protect itself against loses from the fall in prices, the CCC will delay forward cocoa sales for the 2017-18 crop until after January as it waits for prices to rise, the sources said.
The CCC plans to increase the deposit required for a cocoa export contract to 5 percent from 2.5 percent, another measure designed to curb speculation on cocoa prices, the sources said. The state cocoa council also plans to temporarily scrap a three-month deadline for exporters to roll over futures contracts, starting this quarter, for the rest of the 2016-17 season. The sources said this was so some smaller exporters who risked defaulting on their positions because of low prices could try and ride out the storm.