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Posted by Daniel Workman Jul 12, 2007 |
Chocolate makers like Hershey buy a mix of cocoa beans and cocoa products such as cocoa butter, cocoa liquor and cocoa powder. According to Hershey's 2006 annual report, cocoa beans are grown principally in Far Eastern, West African and South American regions around the equator.
West African countries including Nigeria produce about 70% of the world's crop of cocoa beans.
Civil unrest in the world's largest cocoa-producing country, the Ivory Coast, has cause volatile cocoa prices. However, analysts believe that other cocoa-exporting countries and existing inventories in importing nations provide a significant supply buffer.
Besides, never in the history of international trade has any cocoa-producing country experienced a total loss of its cocoa crop and exports.
In 2006, world cocoa prices traded in a range between US$0.67 and $0.749 with an annual average of $0.70. That's up slightly from an average of $0.683 in 2005 and $0.687 in 2004.
However, prices showed a much smaller range ($0.074) in 2006 than in any of the other years. For example cocoa prices jumped $0.142 in 2003, for problems that apparently had a much greater downside effect than the Ivory Coast disruptions last year.