As Africa grapples to contain the deadly Ebola virus, cocoa prices and related exchange traded notes are rising on fears that an outbreak will disrupt the world’s largest producer.
Cocoa prices are moving toward a three-year high due to concerns over a potential Ebola outbreak in the Ivory Coast or Ghana, which produce about 60% of the world’s cocoa, the Wall Street Journal reports.
No cases have been report in the region, but the the Ivory Coast shares a poorly monitored border with Liberia and Guinea, two of the hardest hit countries.
“Given the extremely porous nature of the border of Liberia and [Ivory Coast] … it appears to be a minor miracle that there have been no reported cases of Ebola” there, Benjamin Spatz, a West Africa policy expert and former adviser to the Liberian government, said in the article.
Analysts warn that even a small number of Ebola cases would cause a significant impact on the market since cocoa is grown by small farmers selling to middlemen who have to travel from farm to farm. Under quarantine conditions, farmers will be quickly isolated and supply would drastically drop.
“The fear people have is that once Ebola is verified in Ivory Coast … it will be pandemonium,” Hector Galvan, senior market strategist at RJO Futures, said in the article. “The worst case scenario—you lose virtually all cocoa exports out of Ivory Coast [or]Ghana for an unknown period of time.”