Ivory unrest drives cocoa prices

Ivory Coast produces about 40% of the world's cocoa

Cocoa traders face a volatile week as unrest in the Ivory Coast threatens to disrupt supplies from the world's biggest producer.

Prices in New York last week jumped 11% and surged 4.2% on Friday as the government attacked rebel positions.

The situation has since deteriorated after nine French peacekeepers died in an air raid and France hit back by destroying Ivorian fighter jets.

Ivory Coast has been divided since a failed coup attempt two years ago.

Dividing line

The north is in the hands of rebels, while the south, where the majority of cocoa is grown, is controlled by the government of President Laurent Gbagbo.

Paris has sent in reinforcements to stop the escalating violence.

Continued hostilities could prevent farmers from going to their fields Fred Eckhard UN spokesman

"Continued hostilities could prevent farmers from going to their fields, affecting the harvesting of food, as well as the biggest revenue earner in the south and west - cocoa," United Nations spokesman Fred Eckhard was quoted as saying by Bloomberg.

On Friday in New York the benchmark December cocoa contract rose $65 to $1,633 a metric ton, a three-month high.

Contracts also climbed in London, ending the week at £913 ($1,700) a ton, the highest close in two months.

"If the government is able to contain the conflict above the rebel demarcation line, it should have a relatively small impact on the cocoa world," said one trader in New York.

"If you find that rebels, even for a brief period, gain the upper hand and move south towards the cocoa zone, then you will have completely different situation.