ABIDJAN, March 19 (Reuters) – Ivory Coast’s Coffee and Cocoa Council (CCC) is expected to increase the state-guaranteed price paid to its cocoa farmers by at least 11% ahead of the mid-crop season starting in April, according to two officials who spoke on condition of anonymity.
The world’s top cocoa grower will set its farmgate price at between 2,000 and 2,300 CFA francs ($3.35-$3.85) per kg, up from 1,800 CFA francs, the sources from the market regulator told Reuters.
One of the officials said President Alassane Ouattara had instructed the regulator to set the farmgate price in line with the market.
Despite cocoa futures on the ICE exchange hitting four-month lows last week, the regulator still plans to increase the guaranteed price paid to farmers, the official said.
The second official added that the hike was justified because the regulator was able to make good sales at a time when the market was fairly bullish.
Both sources also said Ivory Coast was about to experience its worst mid-crop output in the last 10 years due to an unusually long dry season.
They acknowledged concerns raised by exporters and pod counters who expect the mid-crop to drop to between 280,000 and 300,000 metric tons of cocoa.
Rains started falling in some growing regions at the end of February but the officials said it wasn’t enough to reverse the current trend.
This is why the regulator decided to reserve the mid-crop harvest for locally based grinders, the sources said, adding that the CCC had sold them contracts for 275,000 metric tons.
Despite negative predictions, export contracts are not expected to be postponed, the sources said. Last season, the regulator had to roll over contracts for around 150,000 tons due to a poor main crop and the exclusive sale of the mid-crop to grinders.
The country’s annual production is expected to be similar to last year’s 1.75 million metric tons.
“Today, our main concern is next season. It’s still a long way off, but we’re already thinking about it to anticipate the future,” one of the officials said.
($1 = 596.7500 CFA francs)
(Reporting by Ange Aboa; Editing by Anait Miridzhanian, Kirsten Donovan)
