Chocolate makers are well covered ahead of Christmas and may have bought enough butter for the first quarter of 2007, leaving grinders in Southeast Asia with mounting stocks of ingredients, dealers said on Thursday.
On the bean side, the mid-crop harvest tapered off in Indonesia's main growing area of South Sulawesi, where floods and landslides may cut output by up to 3 percent. Indonesia is the world's third-biggest cocoa producer after Ivory Coast and Ghana. "Weekly shipments have dropped to around 500 tonnes from 1,000 tonnes in November.
The price is erratic and everyone is looking for beans," said a dealer in Makassar, the provincial capital of South Sulawesi. "We may see some beans until the end of December, and I guess the crop season will conclude in January," he said.
Torrential rains triggered flooding and landslides in the province in late June, flattening houses, turning vast areas into lakes and killing more than 200 people. South Sulawesi produces between 50,000 and 60,000 tonnes of cocoa beans from the mid-crop harvest, which traditionally runs from October to December. Trade officials expected the mid-crop to fall up to 3 percent. Tight supply pushed up the price of Sulawesi cocoa beans, collected from farmers and middlemen, to around 12,200 a kg ($1.34) on Thursday, from 11,600 rupiah last week.
Indonesia sells beans to grinders in Malaysia, Singapore, the United States and Brazil. Dealers said chocolate makers seemed to have ample stocks of butter and powder to meet Valentine's Day and Easter demand next year.
"Not many people want to buy butter. They are just asking for the price but don't buy anything," said a grinder in Malaysian State of Sabah. "People need to buy for next year but it seems they have bought enough butter. We have to push up the ratios because the London price is so low," he said.
Grinders in Malaysia, which is Asia's largest grinder, offered butter at a ratio of 2.42 times London futures for nearby shipments, hardly changed from last month.