Floods and landslides which hit Indonesia's main cocoa growing island of Sulawesi may cut mid-crop output by up to three percent, but exports were largely unaffected, dealers said on Thursday. On the product side, slackening demand and ample supplies put pressure on the price of cocoa butter, a key ingredient for chocolate.
Powder prices hardly moved with grinders in Southeast Asia keen to sell the product to help ease stocks, said dealers. More than 200 people were killed after torrential rains triggered flooding and landslides in South Sulawesi province in late June, flattening houses and turning vast areas into lakes.
"There will be a decline in the mid-crop but it won't be much. It will be around two to three percent because the affected areas are not that wide," said Helium Razak, chairman of the Indonesia Cocoa Association.
"There are between 30,000 and 40,000 hectares of cocoa growing areas affected by the floods but those areas are not major bean producers in South Sulawesi," Razak told Reuters by telephone from the provincial capital of Makassar.
South Sulawesi produces between 50,000 to 60,000 tonnes of cocoa beans from the mid-crop harvest, which traditionally runs from October to December.
Cocoa plantations in the province total 300,000 hectares. The provinces of south, central and south-east Sulawesi account for 75 percent of cocoa output in Indonesia, the world's third-largest producer after Ivory Coast and Ghana.
Indonesia sells beans to grinders in Malaysia, Singapore, the United States and Brazil.
Grinders in Malaysia and Indonesia offered butter at a ratio of 2.20 times London futures for nearby shipments. The ratio has been unchanged in the past few weeks, suggesting slow demand.
Chocolate manufacturers were well covered to meet demand during the summer months, and dealers said it was for them to buy butter and powder ahead of Christmas.
"There's been a lot of expansion over the last year, so we see added capacity. That's why the butter ratio is under pressure and the chocolate industry is not really increasing purchases," a dealer in Singapore said.
"The powder price is all over the place in Asia. It ranges from between $600 to $800 a tonne, depending on the quality," he said.
Some grinders in Indonesia, Asia's second-largest grinder after Malaysia, offered powder as low as $580 a tonne, dealers said. Butter prices are determined by multiplying the ratio with related contracts in London.
When processing beans, grinders get butter and cake, which is later pressed into powder and used for coating in chocolate-making, beverages and ice-cream.
In the bean sector, dealers said daily arrivals at the export port of Makassar from plantations were steady at 400 tonnes this week. This month, a vessel loaded with 8,000 tonnes of beans set off the United States, said dealers. "Regular shipment to Malaysia and Singapore are still ongoing.
There are one or two shipments a week with volume ranging between 1,000 to 3,000 tonnes," said a Makassar trader. On Thursday, prices of Sulawesi cocoa beans, collected from farmers and middlemen, rose to between 12,800 rupiah and 13,000 rupiah ($1.40-$1.43) from 11,700 rupiah and 11,800 rupiah a kg two weeks ago, tracking gains in New York.
Comments
Comments are closed.