* World prices have dropped about 40 pct
* Large Ivory Coast mid-crop could push them down further
By Ange Aboa
ABIDJAN, May 11 (Reuters) - Cocoa exporters in Ivory Coast worry that the continuing slide in world prices risks leaving the top producer’s marketing board unable to cover support payments on mid-crop exports, company officials told Reuters on Thursday.
Ivory Coast sells forward the bulk of its harvest through auctions of export permits in order to establish a price scale that guarantees a minimum income to farmers.
But if exporters win volumes at levels below the cost, insurance and freight (CIF) reference price fixed by the Coffee and Cocoa Council (CCC), the regulator is on the hook for the difference.
“There’s reason to worry. We don’t know if it has adequate financial resources,” one Abidjan-based exporter said.
London and New York prices have dropped by around 40 percent since July last year due to expectations of bumper crops in West Africa, which produces most of the world’s cocoa.
The CCC slashed its April-to-September mid-crop farmer price by 36 percent to 700 CFA francs/kg as a result. Yet prices have continued to fall. New York cocoa last month hit its lowest level since August 2007.
Of eight exporters contacted by Reuters, six believed that, by the end of the season in September, the CCC would no longer be able to make support payments. Only one said he was confident it had sufficient resources, while another said she was not sure.
The CCC did not respond to a Reuters request for comment.
Though the regulator held some 170 billion CFA in its reserve funds by the end of December, it was forced to intervene to support contracts this year after it sold some 350,000 tonnes of beans amid a wave of defaults.
Though the current level of the funds is unknown, Agriculture Minister Mamadou Sangafowa Coulibaly said last month that the system had proved robust despite this season’s difficulties.
Exporters, however, argued that the pressure on the CCC was far from over.
“For us, the most likely trend is that prices will fall from here to June/July when the biggest (mid-crop) volumes will start to be available,” a second international exporter said.
That could potentially leave Ivory Coast with large volumes it must sell below the CIF reference price.
“It’s not impossible that the CCC will find itself paying support on one-third to two-thirds of the mid-crop by the end of September,” the director of another international exporter said. “That makes us worry we won’t be reimbursed entirely in the end.” ($1 = 597.4000 CFA francs) (Additional reporting and writing by Joe Bavier; editing by Susan Thomas)