COCOA ORIGINS DISMAYED BY BUFFER STOCK ACTION
Traders recently returned from West Africa
say some producers there are dismayed by the ineffective action
so far by the International Cocoa Organization (ICCO) buffer
stock manager on buffer stock purchases.
    One trader said some West African producers are annoyed the
Buffer Stock manager is not playing his part as required by the
International Cocoa Pact to stabilise prices from current lows.
    So far, only 21,000 tonnes of second hand cocoa have been
taken up for buffer stock purposes and this, traders noted,
only on an intermittent basis.
    They noted the purchases, of 8,000 tonnes in the first week
he bought and 13,000 in the second, are well short of the
limitations of no more than 5,000 tonnes in one day and 20,000
in one week which the cocoa agreement places on him.
    The traders recently returned from West Africa say
producers there are unhappy about the impact on cocoa prices so
far, noting producing countries are part of the international
cocoa pact and deserve the same treatment as consumers.
    London traders say terminal market prices would have to
gain around 300 stg a tonne to take the ICCO 10-day average
indicator to its 1,935 sdr per tonne midway point (or reference
price).
    However, little progress has been made in that direction,
and the 10-day average is still well below the 1,600 sdr lower
intervention level at 1,562.87 from 1,569.46 previously.
    The buffer stock manager may announce today he will be
making purchases tomorrow, although under the rules of the
agreement such action is not automatic, traders said.
    Complaints about the inaction of the buffer stock manager
are not confined to West African producers, they observed.
    A Reuter report from Rotterdam quoted industry sources
there saying Dutch cocoa processors also are unhappy with the
intermittent buffer stock buying activities.
    In London, traders expressed surprise that no more than
21,000 tonnes cocoa has been bought so far against total
potential purchases under the new agreement of 150,000 tonnes.
Carryover holdings from the previous International Cocoa
Agreement in the stock total 100,000 tonnes.
    Terminal prices today rose by up to 10 stg a tonne from
Friday's close, basis July at its high of 1,271.
    It seems that when the buffer stock manager is absent from
the market, prices go up, while when he declares his intention
to buy, quite often the reverse applies, traders said.
 Reuter
