February 20, 2018 / 5:13 PM / 6 months ago

Ivory Coast cocoa council bans Belgian trader Sopex for 10 years

ABIDJAN, Feb 20 (Reuters) - Ivory Coast’s Coffee and Cocoa Council (CCC) has banned Belgian trader Sopex from contracting with local cocoa exporters and processors for 10 years for failing to respect its commercial engagements, a CCC statement seen by Reuters on Tuesday showed.

In an official statement sent to Ivory Coast’s main cocoa exporters’ union on Feb. 9, the CCC said it had banned Sopex from signing contracts for the current and next 10 growing seasons, although it said sales already agreed to should still be executed.

A Sopex representative in Belgium declined to comment.

Crashing world prices last year for cocoa in top grower Ivory Coast forced the CCC to resell around 350,000 tonnes of contracts after exporters failed to lock in prices with counterparties amid speculation global prices would rise.

Sopex, an independent commodity trader based in Antwerp, was the counterparty to Ivorian exporter Nocoacy, which defaulted on about 41,000 tonnes of contracts last year, costing the CCC 21 billion CFA francs ($40 million).

Sources at the CCC said the action against Sopex is meant to hold it responsible for failing to provide information to the council that would have indicated Nocoacy was speculating, and they warned additional companies would face similar sanctions.

“The director general of the council wants to be uncompromising,” one source at the CCC said, adding the council wanted “to show our determination ... to clean up the sector and no longer allow defaults.”

At the start of the current growing season last October, the CCC announced a series of measures to avoid new defaults, including a requirement that counterparties have substantial experience in the cocoa sector and a solid capital base.

“We want to say to the market that, from now on, an exporter in default must suffer the consequences of its actions, but also the counterparty,” a second source at the CCC said.

“There are other exporters and their counterparties who will be banned from our system in a few weeks,” the source added. ($1 = 527.2500 CFA francs) (Editing by Aaron Ross and David Evans)

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