Virtual Metals Group

Media/Press

Ivorian cocoa data inflated by smuggling -analysts

DAKAR May 21 (Reuters)

Ivory Coast's official cocoa output figures may overstate the country's real production by tens of thousands of tonnes, pointing to steeper than expected declines in the top grower nation.

The most recent data from industry regulator BCC puts port arrivals -- the best reflection of output in the West African country -- three percent below a year ago at 931,366 tonnes, but analysts said a big chunk of that was smuggled in from Ghana.

"(Ivory Coast) has been helped enormously by smuggling from Ghana. It is difficult to evaluate, but it was a very intense business," said Francois Ruf, researcher at France's Cirad tropical agriculture institute.

He said the amount smuggled in so far this season, which started in October, could be "close to 100,000 tonnes".

A big flow of smuggled beans into Ivory Coast would mask the depth of production declines from the grower, which accounts for a third of world supply, as the sector suffers from years of underinvestment since a 2002-03 civil war.

The country produced 1.22 million tonnes during the 2008-09 season, the worst crop in at least five years, which contributed to a spike in world cocoa futures to 30-year highs.

Ivory Coast's representative to the International Cocoa Organisation said this season's harvest will be even worse at around 1.20 million tonnes, due in part to the spread of swollen shoot disease and a lingering political crisis that has stalled critical government reforms.

GHANA SEEKS TO CRACK DOWN

In neighbouring Ghana, the world's No. 2 grower, authorities have attempted to crack down on smuggling of beans they say has undercut their own official output by some 40,000 tonnes.

They have said Ghanaian beans are being smuggled into Ivory Coast and Togo where prices are higher.

But Togo's official purchases figures for the first quarter of 2010 show only a small increase from last year at 4,755 tonnes from 4,626 tonnes, signalling most of the smuggled beans are likely to have ended up in Ivory Coast.

"Most if not all have gone to Ivory Coast," said Kona Haque, commodity strategist at Macquarie Bank. "But even if it was only half, the fact is year-to-date output in Ivory Coast is disappointing. They're getting smuggled beans, there's more application of fertilizer, prices are higher, the weather's been good... and still production is falling."

Haque said she was likely to cut her full-year forecast for Ivorian cocoa output from 1.23 million tonnes. "That's starting to look too high," she said.

Analysts said production could continue to fall in the coming years due to the long-term effects of underinvestment on plantations and as some farmers turn to more lucrative crops like rubber -- a trend that could allow Ghana to eventually unseat Ivory Coast as top grower.

"I don't think this is a problem that can be fixed in a season, or even a half a dozen seasons," said Gary Mead, an analyst at VM Group.

Ghana has said it hopes to raise production to 1 million tonnes annually by 2012, from 710,000 tonnes during the 2008-09 season. (Additional reporting by David Lewis in Dakar and John Zodzi in Lome; editing by Anthony Barker)

VM Group in the News

2010

2009

2008

2007

2006

2005

  • September 26th - Europe's central banks seen queuing up to sell gold (Reuters)
  • THE YELLOW BOOK - Virtual Metals Research & Consulting and Fortis Bank in a new analysis of the global fundamentals and outlook for the international gold market.
  • Virtual Metals Research & Consulting announces today the launch of an innovative mechanism for the funding and development of sustainability projects in the minerals extraction industry. The new entity – called MineLife - is a collaboration between Virtual Metals, Barrick Gold Corporation, Gold Fields Limited, and Harmony Gold Mining Limited. It is dedicated to alleviating poverty and building long-term socio-economic development in Africa and, ultimately, in other developing markets.
  • Q2 05 The Hedge Book - Global hedging falls 2.5 Moz to 53.1 Moz
  • The latest edition of the Hedge Book, sponsored by Mitsui, shows dehedging quickened to 2.5 Moz in Q2 05, up from just 1.3 Moz in Q1 05. For the press release and full report click here

© 2009 Virtual Metals. All Rights Reserved. Logos by Shen Schubert

CONTACT US: info@virtualmetals.co.uk