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Agriterra flags boost from buoyant cocoa market

Agriterra highlighted the boost to its prospects from high cocoa prices, which set a one-month high, as it unveiled "rapid development" in the crop, including a distribution deal with commodities giant Noble Group.

The Africa-bsaed group, better known as a beef producer and corn processor, said that it doubled to 3,200 hectares its area of cocoa plantations in Sierra Leone, and was in talks to buy a further 1,550 hectares at a neighbouring site.

Besides cultivating 250,000 seedlings for a cultivation programme, Agriterra said that it had built two new cocoa stores, with a 2,000-square-meter warehouse and a processing facility to come onstream in November.

Furthermore, the group, seeking certification by the Rainforest Alliance as an ethical producer, revealed a supply deal with Noble Group, the Singpore-based coal-to-cotton commodities house, and one of the "Now" group, with Olam International and Wilmar International, of leading Asian ag traders.

'Cocoa shortages expanding'

Agriterra's tie-up with Noble, and other unnamed cocoa traders, "will give us a competitive advantage as we begin to produce cocoa from our own plantation", Andrew Groves, the Agriterra chief executive, said.

He also flagged the boost to the group from the dynamics of a market in which "cocoa shortages are expanding as chocolate sales climb to record highs.

"With this backdrop of a favourable pricing environment for cocoa, and a proven track record to deliver, I believe we are well positioned to increase revenue generation and margins over the coming years," Mr Groves said.

'Plagued with dry weather'

Cocoa futures for December hit a one-year high of $2,657 a tonne in New York on Thursday, boosted by continued talk of world production shortfalls prompted by buoyant demand at a time of weather and disease setbacks in the top West African producing countries.

"We remain bullish on cocoa due to demand and supply factors such as the unfavourable weather outlook for West Africa's cocoa crop and growing demand for cocoa supplies," Joyce Liu at Singapore-based broker Phillip Futures said.

"West Africa had been plagued with dry weather which could adversely affect the supply of cocoa."

Agriterra shares rose 4.2% to 2.35p in London.

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