Tag: cocoa

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Ghana Secures Financing for 2008/09 Cocoa Season

The Ghana Cocoa Board (COCOBOD) has just signed a $1 billion financing deal with a syndicate of international banks to finance cocoa buying for the 2008/09 cocoa season. The bank consortium includes both European and  Japanese banks and is believed to be the largest soft commodity financing deal ever.

Readers of this blog will recall my analysis of financial flows that make the Kuapa Kokoo cooperative work (April 16th). The flow chart showed that the cooperative, as a licensed cocoa buyer, reports its anticipated target capacity to COCOBOD and then receives (as loans) the necessary funds to cover the buying of the cocoa from the farmers.

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Indonesia’s Cocoa Problems

Since 1980 Indonesia, and specifically its Sulawesi province, has emerged as a major cocoa producer in the world. Starting from inauspicious beginnings, Sulawesi represents on of the successes of the chocolate industry’s diversification strategy. Total production increased from only 12,400 tons in 1979/80 to a predicted harvest of 480,000 tons during the current season. But all is not well with Indonesian cocoa.

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We Need A New International Cocoa Agreement

What goes up must come down. The old trading adage certainly applied to cocoa this summer. After reaching $3,290/ton on July 1, the futures price dropped to $2,801/ton by July 28. That’s a drop of almost $500 in a month. Nobody can explain such a decline with changes in supply and demand of cocoa. There was no news of larger than expected increases in cocoa supplies. If anything, there were indications that the light harvest in both Ghana and the Côte d’Ivoire would be less than last year. So it’s back to the speculators.

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