(Bloomberg) -- Political tensions flaring up in the world’s largest cocoa producer sent New York futures up the most in more than a month.
Ivory Coast issued an arrest warrant for opposition presidential candidate Guillaume Soro, accusing the former rebel leader of preparing a coup. The move on the threshold of an election year fueled fears of political instability.
The last time Ivory Coast had a disputed election was in 2010, when then President Laurent Gbagbo refused to cede power to Alassane Ouattara. Tensions ended up resulting in a civil conflict and a ban on cocoa exports that sent global prices soaring.
“The fundamentals of the market remain good, with plenty of cocoa ready to come out,” said Jack Scoville, vice president of Chicago brokerage Price Futures Group. “But the political situation remains in flux, and some speculators are now worried about delivery problems because of this.”
Cocoa futures surged as much as 4.6% in New York, the most since Nov. 12. Prices settled 3.8% higher at $2,497 a metric ton. In London, futures surged as much as 3.7%.
Soro, 47, is being sought for “endangering state security, embezzlement of public funds and money laundering,” prosecutor Richard Adou told reporters on Thursday as he played a seven-minute recording in which Soro allegedly tells an unknown interlocutor that weapons and key people are “positioned pretty much everywhere” at strategic locations.
Soro’s lawyer and spokeswoman, Affoussiata Bamba-Lamine, said in a video posted on the official Facebook page of Soro’s political party that the recording dates from 2017.
Friday’s rally may help cocoa end the year with a gain. The commodity, which until Thursday was little changed for 2019, is now heading for an annual price increase of 3.4% in New York. Still, demand in Europe remains weak, said Peter Mooses, a senior market strategist at RJO Futures in Chicago.
“Although the global tone and negative political news is causing a rally today, I don’t see it lasting long unless this uneasiness doesn’t pass,” he said. The March contract has reached “oversold territory technically, so these prices are positive for bulls waiting to re-enter,” he said.
On Thursday, cocoa inventories monitored by ICE Futures U.S. fell to the lowest since December 2016. The stockpiles capped a 27th straight weekly decline.
--With assistance from Patrick McKiernan.
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