SINGAPORE: Indonesia, the world's third-largest cocoa producer, may see this year's output fall to its lowest since at least 2004 at 420,000 tonnes due to erratic weather and a fungal disease, the Indonesian Cocoa Association (Askindo) said on Monday.
Concerns about supply from Indonesia, which accounts for 10 percent of global output, could offer support for New York cocoa futures , which have dropped from a 32-year peak hit in March partly due to the return of peace in top grower Ivory Coast.
"It's been raining a lot in the last two years. The worst impact on production will be felt this year. Many flowers have fallen from the trees and pods have rotted," said Askindo chairman Zulhefi Sikumbang, who pegged Indonesia's output at 600,000 tonnes last year.
"Production could even fall by 20 to 30 percent. Output is likely to reach below 500,000 tonnes," Sikumbang told Reuters ahead of an international cocoa conference held by Askindo this week.
Indonesia has been dealing with pests and diseases for years. Heavy rains in the main growing island of Sulawesi have once again triggered the spread of Vascular-streak Dieback (VSD), a disease that attacks branches, leaves and trunk, eventually killing the trees.
In March, the Askindo expected Indonesia's output to be flat at 600,000 tonnes in the calendar year 2011. The International Cocoa Organization put Indonesia's output at 510,000 tonnes in the crop year to September 2011.
"The VSD is getting worse because of persistent rains. I think for this year, the harvest will only peak once. There are plenty of cases of failed pods. The pods are there, but there are not many."
VSD is an additional blow to the cocoa industry in Indonesia, which has been battling another disease, cocoa pod borer, since the 1980s. Pod borer is a worm-like pest which feeds on cocoa beans. The last large-scale VSD attack in Indonesia happened in 2008.
The main crop is currently underway in Sulawesi, but low arrivals suggest the harvest was problematic after heavy rains earlier this year. The crop is likely to last through August before a smaller harvest, or mid-crop, begins in October.
"The dry season has started. I think the main crop will only happen in October or November. The peak should have happened in April, but it didn't," said Sikumbang.
The Askindo said in April exports may fall as much as 12.5 percent this year due to wet weather hitting output, and is set to drop further in 2012 on rising domestic consumption.
Indonesian cocoa grinders expect to process 280,000 tonnes of cocoa beans this year, up about 55 percent from last year, as they expand capacity to benefit from a recent tax change on cocoa beans exports, according to the Indonesian Cocoa Industry Association.
Indonesia also exports cocoa beans to grinders in Malaysia, Singapore, the United States and Brazil.
Copyright Reuters, 2011
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