Cocoa fell from its highest price in more than three months in London on speculation exports from Ivory Coast, the world's biggest grower, will carry on amid political unrest following the disputed presidential election.

The election, intended to unite the West African country, has turned into a standoff, as incumbent Laurent Gbagbo and challenger Alassane Ouattara both claim victory. Cargill Inc., a cocoa shipper in the country, said this week the unrest is causing "challenges both in terms of delivery of beans and logistics on the ground."

"In the past when there has been conflict in Ivory Coast, the cocoa industry tends to make sure that shipments carry on," Gary Mead, an analyst at VM Group in London, said today by phone. "Until we have satisfactory resolution in Ivory Coast then cocoa is going to be volatile."

Cocoa for March delivery lost 23 pounds, or 1.1 percent, to 2,015 pounds ($3,177) a metric ton at 11 a.m. on NYSE Liffe in London. The commodity has risen 14 percent since it's year-low on Nov. 8, with prices surging 4.5 percent last week, the biggest gain since the week to June 4.

"There are two basic things in play moving the price," Mead said. "One is the likelihood of a large Ivory Coast main crop, facing against complete political uncertainly, which most people assume correctly will result in fresh rounds of civil protest."

Cocoa production may exceed demand by 100,000 tons in the current season as rainfall increases and West African governments invest in the industry, the International Cocoa Organization said Oct. 13. Global output of the beans will be 3.8 million tons, compared with demand of 3.7 million tons, Executive Director Jean-Marc Anga said.

Eoin Treacy's view Political uncertainty and a contested election result are short-term bullish for cocoa prices. It remains to be seen just how much of the crop makes it out of the country in this environment. Historically, episodes of political unrest have resulted in significant volatility in cocoa prices. To the best of my knowledge most of the cocoa traded in London is sourced in the Ivory Coast while the US contract is more dependent on supply from the Americas.

£1000 was a psychological barrier for Cocoa for much of the 20 years preceding 2008 and particularly so from 2004 to late 2007. Prices broke emphatically upwards in early 2008 and rallied to surpass the 2002 peak near £1500. The market has trended higher for more than two years and endured a considerably larger pullback from the June peak near £2500. The 200-day MA has also now turned downwards.

Sharp reactions are not unusual for this market and prices found support over the last month near £1800. A failed break below that level and subsequent rally out of the short-term range indicates the return of at least short-term demand. London cocoa continues to trade in contango, suggesting that a short-term supply squeeze is not yet a major concern but the upside can continue to be given the benefit of the doubt in the absence of a sustained move below £1800.

US traded Cocoa has rallied more than 300% from the 2001 lows but the consistency of the advance has been checkered with periods of extreme volatility as well as some very lengthy ranging phases. It found support in the region of $2600 from September and broke out of a three-month range on Monday. Provided the break above $2900 can be sustained, the near-term upside can continue to be given the benefit of the doubt.