Indonesian cocoa prices jumped more than 12 percent on Friday from its weakest in 11 months hit last week as the rupiah dropped and supplies tightened after floods struck plantations in the growing island of Sulawesi.
Heavy rains disrupted the transport of beans to the port city of Makassar from plantations in South Sulawesi, where at least three people have been killed and nearly one thousand families affected. "Under the current circumstances, deliveries of beans from the affected areas have been delayed," said a dealer in Makassar, the provincial capital of South Sulawesi, adding that farmers also had trouble drying the beans.
The mid-crop is under way in Sulawesi and likely to last to December but recent rains curbed supplies, while a weaker rupiah helped pluck bean prices from an 11-month hit a week ago and defy weakness in New York futures. "For a few days this week, floods inundated some cocoa plantations in Sulawesi. Floods also cut road access from some sub-districts to the main road to Makassar," a Reuters reporter in Makassar said.
Prices of Sulawesi's fair-average cocoa beans rose to a range of 17,000-18,000 rupiah ($1.53-$1.62) this week from as low as 16,000 rupiah ($1.49) on October 27. Prices of Indonesian cocoa beans track New York contracts. New York's benchmark December contract closed down $60, or 3 percent,at $1,913 per tonne on Thursday, pressured by the lower sterling against the dollar and selling in other commodities.
But tight supply and falling rupiah helped prices in Sulawesi shrug off selling in New York. The rupiah has lost about 11 percent in the past two weeks amid persistent fears of a sharp global downturn. "Given the weakness in futures prices, I would say local bean prices are quite good due to the weaker rupiah," said a dealer in Makassar.
"Had the rupiah bounced back to its level a month ago, near 9,500 per US dollar, cocoa bean prices should have dropped," another trader in Makassar said. Sulawesi accounts for about 75 percent of the cocoa output in Indonesia, the world's third-largest cocoa producer after Ivory Coast and Ghana.
Indonesia is expected to see its output falling to 480,000 tonnes in 2008, from 520,000 tonnes in 2007, after the recent spread of a deadly fungal disease, the Vascular-streak Dieback, killed cocoa trees in plantations across Sulawesi, according to the Indonesian Cocoa Association (Askindo).