Ivory Coast cocoa traders take issue with major contracts as prices surge

ABIDJAN: Ivory Coast cocoa traders are seeking to reallocate fixed-price contracts with big buyers, including Swiss chocolate maker Barry Callebaut, as a surge in bean prices has left them at risk of selling at a loss, their trade association said.

The West African country is the world’s leading cocoa producer, but unfavourable weather has hit production, pushing cocoa prices above the guaranteed price for exporters and grinders that the Coffee and Cocoa Council (CCC) sets.

International prices have hit record highs and demand for cocoa is strong, meaning it should be relatively easy to find other multinationals to take on contracts.

Neither the regulator CCC nor Barry Callebaut immediately responded to a request for comment.

An official from the domestic trade association GNI said Barry Callebaut was refusing to pay more than the CCC price, meaning the traders could not afford to fulfil contracts to supply it with 45,000 metric tons of cocoa.

Speaking on condition of anonymity, the official said the traders had had no choice but to overpay to secure the beans.

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Although CCC rules forbid overpayment, high global prices and lower cocoa volumes meant most exporters paid extra last season and the regulator has tended to overlook the practice.

A Barry Callebaut manager, who did not wish to be named, said in January the company had slowed its purchases since mid-December because of high prices.

While the CCC has set the price for exporters and grinders at 1,915 CFA francs ($3.07) per kilogram, suppliers are asking traders to pay between 2,100 and 2,200 CFA francs, cocoa exporters, buyers and cooperatives said.

At a meeting last week, GNI members agreed to ask the CCC to reassign outstanding export contracts that had been agreed with Singapore-based trader Olam as well as with Barry Callebaut, the GNI official said.

The Olam contracts that GNI members want to be reallocated cover sales of 20,000 tons, according to an Olam official, who also spoke on condition of anonymity.

The person said Olam had always honoured its contractual commitments and will continue to do so, adding: “We pay for cocoa at the price guaranteed by the CCC.”

Olam also did not immediately respond to a request for comment.