Ivory Coast sold at auction around 350,000 tonnes of cocoa from defaulted contracts and excess production, the agriculture minister said on Wednesday, adding support for exporters related to the sales was covered by the country's reserve fund. A wave of defaults by exporters who wrongly speculated world prices would continue a long rise has created a glut of beans that has jammed up ports and warehouses, leaving cocoa to rot on trees for lack of buyers.

"The contracts in default and the excess production were entirely sold," Mamadou Sangafowa Coulibaly told reporters in the first public acknowledgement of the scale of the resales. Ivory Coast sells forward the bulk of its output and uses the average auction price to fix a guaranteed price for farmers. The Coffee and Cocoa Council (CCC) marketing board launched spot auctions in late December in anticipation of the defaults.

Exporters are still required to purchase physical cocoa for their spot contracts at the government-mandated price. However, the CCC must cover any losses they incur selling those beans at current world price levels.

Copyright Reuters, 2017