Ivory Coast Cocoa Grinding Could Drop To Half In May
Ivory Coast cocoa grinding could drop by half to 25,000 tonnes in May, and even further in June, due to power shortages in the world's top grower, five sources, including some in the exporters' association GEPEX, has said.
A drop in electricity generation in Ivory Coast since late-April has left households and businesses fuming and cut supplies to neighbouring West African countries Mali and Burkina Faso.
Grinders will be allowed to export and process their beans elsewhere, likely in their European or US factories, said industry regulator, the Coffee and Cocoa Council (CCC).
Still, the situation could lead to a pile-up of beans in warehouses and could raise the price of semi-finished products as exporters struggle to fulfil their contracts on time, the sources said.
GEPEX includes multinationals such as Cargill, Barry Callebaut, Olam and Cemoi, all of which have grinding plants in Ivory Coast.
"If the grinders ask us, we'll look into it. We can allow them to grind somewhere else if they ask," CCC director-general Yves Brahima Kone told Reuters.
Ivory Coast typically grinds 45,000 to 49,000 tonnes of beans a month. Grinders said it could drop to 20,000 tonnes in June if power cuts do not stop. It ground 49,000 tonnes in April.
About 80% of beans harvested during the April-September mid-crop are bought by grinders, who prefer the smaller beans. A drop in purchases would be a blow to farmers already hit by low prices.
Some grinders said they have asked the CCC to extend contract deadlines.
"It will be impossible to meet all export contracts if the CCC does not extend our contract execution deadlines," said the director of one grinding company who requested anonymity.
"Everyone is operating at 50% capacity, or even less for some during certain times of the week and we have been obliged to stop the production of butter in favour of mass," said another.
Sources at other grinding companies said they had stopped producing cocoa butter, powder and cake and were only producing cocoa mass.
One company, ICP, said its factory was running at full capacity but only by relying on diesel generators, which has driven up costs.
"It is becoming ... a real logistical challenge to avoid production losses (and) unforeseen financial losses," said the director of another grinding company.