Flowers have turned to cherries in Indonesia's main cocoa growing area of Sulawesi but traders are worried pests may yet take their toll when the plants finally produce their cocoa pods. Asking, the Indonesian Cocoa Association, has said it expects output will rise to 390,000 tonnes this year from an estimated 375,000 tonnes in 2004 because of an expansion in cultivation.
"Cherries have come into sight but it's too soon to predict the progress compared to last year. But weather has been favourable," said one Makassar-based grower. But many traders said pod borer pests, which enter the cocoa beans to feed, would restrict gains and keep the crop at around last year's output range.
Indonesia is the world's third-largest producer after the Ivory Coast and Ghana. Exports of cocoa beans in 2004 from Sulawesi island, which accounts for 75 percent of the country's output, rose around 4 percent to 181,524 tonnes.
However, growers said that was boosted by carry-over beans from the previous year. Cocoa beans from the recently concluded mid-crop are scarce in South Sulawesi and traders said most beans had been shipped out of the island, adding the market was waiting for the main harvest to start in April.
"The setting is not that fantastic, so I think we shall see a normal crop," said one dealer at a trading house in Singapore.
Chairman of the South Sulawesi chapter of Asking, Halim Razak, said the fight against pests would be tough if prices were under the cost production of around $1 a kilogram, stopping them from buying pricey fertilisers.
"I don't see weather as a problem so far. The big problem is pod borer, and cocoa beans have become light," Razak said. Since 1995, crop area has grown 60 percent to 800,000 hectares, yet Indonesia's cocoa output has only risen 30 percent.
On the current supply side, weekly arrivals of cocoa beans received from plantations stood at 200 tonnes and quality was poor. Bean count had been deteriorating, or 10 to 15 more than standard at 120 to 130 beans per 100 grams this week.
Sulawesi beans collected from farmers and middlemen fell to $1.3 a kilogram on Friday, against 12,800 rupiah ($1.4) a kg the previous day, tracking falls in New York. Poor quality beans also widened discounts at $240-$250 a tonne under New York futures for March cocoa, which edged $9 lower to $1,594 a tonne on Thursday, traders said.
Differentials for decent good quality beans were offered at around $160 a tonne.
GRINDERS AWAIT EASTER DEMAND: The product market was quiet as grinders watched the progress of the crop season and waited for more chocolate manufacturers to stock up ahead of Easter. Chocolate manufacturers are well covered ahead of Valentine's Day celebrations in February, said dealers.
Powder prices were unchanged between $900 and $1,200 a tonne in Malaysia. Indonesian powder was much cheaper at around $800 because of ample stocks in Asia's second-largest grinder after Malaysia.
"We've seen interest in butter and people are looking to sell the product for the second half of this year," said another dealer in Singapore.
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