At least 20,000 tonnes of cocoa beans are set to leave for the United States this month from Sulawesi, marking the return of the main buyer to Indonesia's key growing area after a two-month absence, traders said on Thursday.
But traders said a shortage of vessels that had pushed up freight rates could limit US buying. The United States buys around 40 percent of Indonesia's cocoa output annually.
"It's expensive to ship beans from Makassar to the United States nowadays. The freight rates have gone up by 20 percent to $135 a tonne," said one trader in Makassar, a key export port city in South Sulawesi.
Traders said two vessels would leave for Philadelphia from Makassar with 10,000 tonnes of beans each later this month. There had been no shipments to the United States in December and January because of difficulties in finding ships, said traders.
Indonesia, the world's third-largest cocoa producer, ships beans to grinders in the United States, Brazil and some Asian countries.
Around 10,000 tonnes of beans were also scheduled to leave for Brazil from Makassar in February, said traders.
Traders said supply was tight in Sulawesi ahead of the main harvest in March but a volatile New York market had encouraged middlemen to sell old beans from the recently concluded mid-crop instead of waiting for an improvement in prices.
CSCE cocoa futures fell after an erratic and choppy session on Wednesday, with speculators and arbitrage players capping an early rally that followed London's gains.
March cocoa lost $19 to $1,581 a tonne after trading between $1,578 and $1,615.
Differentials for Sulawesi beans had narrowed to $165 a tonne under New York's March contract compared with $175 in late January, mainly due to rising freight rates and tightness in supply, said traders.
Some traders said US buyers were likely to look for a cheaper substitute to Sulawesi beans.
"If you look at the differentials, you won't take Sulawesi beans. It doesn't carry very well," said one regional trader.
"On top of that, cocoa in Ecuador is quite abundant and cheaper than Sulawesi cocoa," he said.
Sulawesi traders said persistent rains in Sulawesi, where cocoa trees were flowering, had caused some concern among growers and that rains in Makassar had disturbed cocoa loading.
"Flowering has started but it keeps raining here. In Makassar, it's been raining in the past three days," said the Makassar trader. "One of the vessels bound for the US still can't load beans because of bad weather," he said.