Cocoa records biggest 2-day gain in 11 years on Nigeria strike

16 January 2012, Sweetcrude, Lagos – Cocoa futures jumped, capping the biggest two-day gain in almost 11 years, after a nationwide strike spurred concerns that supplies will be disrupted in Nigeria, the world’s fourth-largest producer.

A Nigerian industry group said shipments from farms for processing have halted. Dry weather may also curb supplies from Ivory Coast, the top grower. Demand in Europe may have climbed in the fourth quarter to the highest since at least 1999, according to the median of nine analysts surveyed by Bloomberg News.

“The strike in Nigeria may limit cocoa supplies,” Carsten Fristch, an analyst at Commerzbank AG in Frankfurt, said in an e-mail. “Weather conditions in Ivory Coast became less favorable of late, which may cause lower production volumes.”

Cocoa for March delivery rose 7.5 percent to close at $2,333 a metric ton at 12:04 p.m. on ICE Futures U.S. in New York. In two days, the price soared 15 percent, the most since Jan. 17, 2001.

A.P. Moeller-Maersk A/S, the world’s biggest container-ship owner, closed its office in Nigeria yesterday because of the strike, Anders Boenaes, a vice president of Africa services, said in an e-mail. All shipments are at a “standstill,” he said.

Government offices that grade beans were closed, Robo Adhuze, a spokesman at the Cocoa Association of Nigeria, said.
Exports Delayed

“Without grading, the beans cannot be certified and bagged for export,” Adhuze said in a telephone interview from Akure in western Nigeria.

Nigeria’s output this season will be about 230,000 tons, or almost 6 percent of global production, according to Marex Spectron Group Ltd. in London.

Last year, futures fell 31 percent, the most since 1999, amid ample supplies from West Africa. Global production was 341,000 tons higher than consumption in the season that ended in September, according to the International Cocoa Organization. The Ivory Coast and Ghana, the second-biggest grower, had record crops. Indonesia is the third-largest producer.

This year, dry weather in West Africa triggered speculation that output will decline. Winds from the desert have the potential to damage crops.

“In Ivory Coast, there are concerns that the dry and windy weather associated with the Harmattan season may lead to an early tailing off of the main crop, while affecting development of the mid-crop,” Kona Haque, an analyst at Macquarie Group Ltd. in London, said in a report.

European Demand
European bean usage last quarter may have climbed 7.5 percent to 368,109 tons, Bloomberg survey data showed. The grinding report from the European Cocoa Association is set for Jan. 13.

Some investors may be unwinding bets on falling prices. Money managers had combined bearish futures and options wagers on 9,694 cocoa contracts as of Jan. 3, according to data from the U.S. Commodity Futures Trading Commission.

“This all might have led to short-covering ahead of European grinding data,” Fristch of Commerzbank said.
In London, cocoa futures for March delivery climbed 8.1 percent to 1,544 pounds ($2,332) a ton on NYSE Liffe. Earlier, the price reached $1,545, the highest for a most-active contract since Nov. 18.