Cocoa’s political impasse-inspired climb (said presidential fracas actually dates back to late 2005, the initial election date) may have legs (March futures hit four-month highs in both London and New York yesterday) if indeed the row in Côte d’Ivoire between Alassane Ouattara and incumbent Laurent Gbagbo (both of whom have sworn themselves in as president) doesn’t subside.  Per one trader: “We need a resolution pronto or the likelihood of unrest could continue. If it gets too hostile at origin, the steamship lines are less likely to visit [Ivory Coast] ports.”  Still an ag-based economy (cocoa, coffee, palm oil), the country is also the continent’s largest rubber exporter and is seeking a bigger presence in oil and gas a la neighboring Ghana.  Yet as The Economist glumly noted over two years ago, any return to the [relative] stability and prosperity it was once known for in West Africa may be difficult to achieve (for vastly different reasons) with either man in control:

“The candidates are not a reassuring lot.  Mr Gbagbo was a fiery opposition leader who fought for years against Félix Houphouët-Boigny, who ruled Côte d’Ivoire for decades. Mr Gbagbo’s clan indulges in rampant corruption, especially in cocoa, which accounts for a third of exports and is worth $1.5 billion a year. With oil soon to be extracted in large amounts, Mr Gbagbo’s people will be keener still to hang on to power. Mr Bédié became president after Houphouët-Boigny died in 1993, made a hash of things, and offers little new. Mr Ouattara, long kept out of politics because his foes said he was not a native Ivorian and so was disqualified, proved his economic credentials at the IMF and in regional economic bodies but might find it hard to hold the fragile country together.”

That said, conditions underpinning the country’s latest crop are drawing kudos from farmers and analysts alike as unseasonal rain mixed with lengthy spells of sunshine during the typically-dry December season should yield higher-than-expected volumes.  Keeping this in mind, says one commodity analyst, markets may be ripe for a sharp correction if, for whatever reason, tensions pass sooner rather than later.

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