Bloomberg News

Cocoa Exports From Indonesia Seen Lowest Since ‘01 on Grind

January 23, 2013

Cocoa bean exports from Indonesia, the largest producer after Ivory Coast and Ghana, will decline for the fourth straight year to the lowest in more than a decade on increased demand from local grinders, a growers’ group said.

Exports may tumble as much as 26 percent to 100,000 metric tons this year, according to Dakhri Sanusi, secretary-general of the Indonesian Cocoa Association. Shipments were 210,067 tons in 2011, 432,427 tons in 2010 and 439,305 tons in 2009, data from the group showed. A total of 100,000 tons would be the smallest amount since at least 2001, when the group’s data series begins.

Reduced supplies from Indonesia may help to halt the 18 percent drop in prices of the chocolate ingredient in New York since September, when it surged to a 10-month high. World demand may outstrip supply by 88,000 tons in 2012-2013, according to an estimate from Rabobank International, and Macquarie Group Ltd. forecasts rising average quarterly prices throughout 2013.

“Local processing capacity is increasing because of new investment and upgrades by existing grinders,” Sanusi said in a telephone interview from Kolaka, Southeast Sulawesi, today. Grinding was about 300,000 tons last year, up from 250,000 tons in 2011, he said.

Cocoa for March delivery rose 0.6 percent to $2,226 a ton by 6:00 a.m. on the ICE Futures U.S. Cocoa will average $2,300 in the first quarter and $2,400 in the following three months as sales from Ivory Coast and Ghana drop, Macquarie’s Kona Haque said Jan. 17. Prices will average $2,450 in the third quarter and $2,550 in the fourth, she said.

Declining Stockpiles

Grinding in Malaysia, Singapore and Indonesia climbed 3.6 percent to 606,622 tons in 2012, the Cocoa Association of Asia said Jan. 21. Inventories with a valid grading certificate in warehouses monitored by NYSE Liffe were 43,020 tons as of Jan. 7, down more than 50 percent in the past year and the lowest since 2003.

Harvesting in Sulawesi island, the country’s main producing region, may be delayed by one or two months from the normal start in May because of heavy rain, Sanusi said. Nationwide output may be unchanged at about 450,000 tons this year, he said.

“It’s hard to expect higher production this year, with the extreme weather that may be disrupting flowering and blossoming,” Sanusi said. “Bean quality will be affected too if the weather is too wet. If we can match last year’s output under these conditions, that’s good enough for us.”

Production growth may also be stagnant because of low yields from aging trees and poor farming practices by small, traditional farmers, he said. Indonesia has about 1.5 million hectares (3.7 million acres) of cocoa plantations and more than half were planted more than 20 years ago, Sanusi said.

Bad weather with high-intensity rain will occur in most parts of Indonesia during the peak rainy season, which may run until mid-February, the Meteorology, Geophysics and Climatology Agency said Jan. 16. Heavy rains caused flooding in the capital, Jakarta, last week, claiming 20 lives and forcing about 46,000 people to seek refuge away from their home.

To contact the reporter on this story: Yoga Rusmana in Jakarta at yrusmana@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net


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