Ivory Coast Tension Could Send Cocoa Prices Sky High (HSY)
If your a chocolate connoisseur or hot chocolate for that matter considering the blizzards drilling the east coast this might not be the article you want to read. Though if you are into trading cocoa futures and are looking for some trading ideas read further.
Political tensions along the Ivory coast are escalating as Ivory Coast’s non elect leader, Laurent Gbagbo refused to hand over power to his incumbent Alassane Ouattara, who is internationally recognized as the victor in November’s elections.
Clearly their political system is tad bit broken but whatever, the focus of this article is the relation of cocoa prices and the tensions in the region. The north and south area’s of the Ivory coast were officially united in 2007 peace deal. The southern region is where the majority of the crop is produced…
|NYMEX COCOA. Daily|
This peace deal has actually kept cocoa prices at bay primarily because the region produces some 40% of the worlds supply of Cocoa. With political cries to remove the defiant leader with force on the heels of The World Bank freezing $800 million in committed financing for Ivory Coast this past Wednesday the situation is indeed heating up.
Now focus on the below paragraphs…
(VOA writes) ‘The Ivorian government taxes cocoa heavily, Pham said, and most of the country’s supply is grown in the southern and western regions under the control of forces loyal to Mr. Gbagbo.
“That being said however, prices are very volatile. The market is very tight. Most of the companies — European and American are the major consumers of the Ivorian production — won’t thank their governments for cutting them off from the supply which puts them at a commercial disadvantage with competitors,” said Pham.
Ivory Coast produces 40 percent of the world’s cocoa supply. The current political crisis has pushed cocoa prices to recent four-month highs but has so far not dramatically interrupted delivery.’
Keep and eye on stocks such as KFT, CAKE, HSY and of course Nestle trading on the Swiss exchange with a 200 billion market cap mind you.. ticker is NSRGY.PK