Cocoa Prices Predicted to Fall

Cocoa prices are predicted to fall 12% after the fight for presidency in the Ivory Coast ends.

Alassane Ouattara, November presidential election winner, banned Ivory Coast cocoa exports in January of this year in an effort to cut off funds to incumbent Laurent Gbagbo. Immediately following the ban, the European Union froze Ivory Coast ports and the state oil company assets. With Ivory Coast cocoa exports accounting for 34% of global supply, prices surged hitting a 32-year high of $3,775 per metric ton on March 4.

Fighting between Ouattara and Gbagbo seems to be nearing an end with Ouattara winning the battle. Currently in the fifth day of battle, Ouattara's troops hold most of the country's commercial capital, Abidjan.

CPM Group commodity analyst Erica Rannestad stated that, “The only real premium on prices right now are derived from concerns regarding political stalemate." After fighting ends, “the only other bullish factors would have to be from supply constraints, but that doesn't seem to be expected in the next year,” he said.

With investors predicting Ouattara's win, Bloomberg survey analysts predict that cocoa prices may fall as low as $2,638. Global cocoa output is expected to soar and exceed demand.