Ivory Coast exporters halt cocoa purchases over pricing dispute
FOREIGN exporters have halted the purchase of cocoa contracts in Ivory Coast for at least a month now over a pricing dispute, according to two people familiar to the matter.
The Gepex group, a consortium of international shippers who buy most of the cocoa in the world’s top producer, is insisting on getting a discount on cocoa due to slowing demand for the key chocolate ingredient amid the coronavirus pandemic, said the people, who asked not to be identified because the matter is private.
The group’s members offered to pay 20 to 50 pounds per ton for the country differential, a premium paid for quality on top of future prices, instead of the current 70 to 100 pounds per ton, the people said. The situation has reached a deadlock, one of them said.
Gepex members are refusing to pay the full amount on the portion of beans that haven’t yet been sold for the main harvest that started this month. The industry regulator, Le Conseil du Café-cacao, has sold 1.45 million tons of the forecast 1.7 million tons for the six-month of the season.
A spokesman for the regulator declined to comment and calls to Gepex went unanswered.
This country differential is one of three key components that make up the price Gepex members pay for cocoa beans. The other two are the cost of futures and the living-income differential of $400 a metric ton.
The shippers, which include the local units of Cargill Inc. and Olam International Ltd., are losing 13 CFA francs ($0.02) per kilo and receiving fewer orders, one of the people said.
Cocoa futures have held up well this year despite the pandemic as uncertainty about elections in West Africa has supported prices. Still, the price of cocoa butter, which accounts for 20 percent of the weight of a chocolate bar, has plunged more than 17 percent this year amid global lockdowns.