Indonesia’s cocoa exports are expected to drop about 14 percent from a year ago to 140,000 tons in 2013, said an industry body, which also reversed its earlier forecast for a rise in output, citing crop-damaging wet weather.
A drop in shipments and weak output from the world’s No.3 cocoa producer after Ivory Coast and Ghana should underpin global prices, which last month hit a two-year high in a market bracing for a deficit in the next four years.
“Heavy rains in Indonesia have hurt the cocoa crop - there are many black pods and instances of the cocoa pod borer disease,” Zulhefi Sikumbang, chairman at the Indonesian Cocoa Association (ASKINDO), told Reuters in an interview.
Bean exports by the country are expected to hit 140,000 tons in 2013, data from ASKINDO showed, up 40 percent from its prior forecast but still below last year’s 163,501 tons.
Output will drop 6 percent to 430,000 tons this year from 456,000 tons last year, Sikumbang told Reuters. ASKINDO had previously estimated 2013 cocoa output at between 450,000 and 500,000 tons.
Production of other farm commodities in Indonesia has also been hit by heavy rains this year. The country has slashed its white sugar output forecast while benchmark palm oil prices climbed to a one-year high last week on concerns about supply from the top producer.
Indonesia has struggled to increase cocoa production in recent years as its ageing trees, most of them planted in the 1980s, are vulnerable to disease that is hard to stamp out because of a vast network of smallholders.
The harvest of the main cocoa crop in Indonesia usually starts in April and peaks in July and August, before a smaller harvest, known as the mid-crop, begins in October or November.
“Compared to last year it is not good,” Sikumbang said, referring to the mid-crop in the main growing island of Sulawesi.
Sulawesi beans traded at $180 a ton below New York futures, however, Sikumbang said, as a government tax had discouraged exports and eroded overseas demand. The beans typically trade at a premium to New York prices.
Lifts Cocoa Import Forecast
Indonesia instituted a monthly export tax for cocoa beans in early 2010 to encourage local grinding and feed a growing regional appetite for chocolate products.
The country is Asia’s No.2 cocoa grinder after Malaysia and is drawing companies such as Cargill and top chocolate maker Barry Callebaut to invest in grinding plants.
Higher domestic grinding capacity may further curb Indonesia’s cocoa exports, which ASKINDO data show are likely to drop to 100,000 tonnes in 2014.
No further details were available on ASKINDO’s export estimates, released after Sikumbang’s interview.
Cocoa imports by Indonesia, mainly from Africa and used for blending, will jump to 50,000 tons this year from 34,000 in 2012, Sikumbang said, higher than a previous forecast of 40,000 tons.
A three-year $350-million government program to revive the cocoa industry ended last year without boosting output, Sikumbang said, adding that a cheaper and better way to increase yields would be to teach farmers improved techniques. (Reuters)