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Asia cocoa-harvest yields poor beans; powder in demand

Aug 18, 2011 9:07:29 PM - www.ft.lk

SINGAPORE (Reuters): The main cocoa harvest was underway in Indonesia’s major growing island of Sulawesi but higher bean count indicated poorer quality, while extreme weather could damage the next crop later this year, dealers said on Thursday.
Slow shipments also suggested that grinders were cutting back on purchases to help ease excess stocks of butter, as ratios for the key ingredient for making chocolates were stuck at nine-year lows at 1.10 times London futures.

Cocoa exports from Indonesia, the world’s third-largest producer after Ivory Coast and Ghana, may plunge almost 40 per cent this year as a deadly fungal disease wrecks crops.
“I don’t think the crop will reach a peak this year. There’s no jump in daily arrivals. It’s difficult to get 500 tonnes of beans a day. The weather is extremely dry this time. Bean count ranges from 115 to 120,” said a dealer in Makassar, the provincial capital of South Sulawesi.
“We will ship 2,000 tonnes of beans to Malaysia this week, but demand from the U.S. is practically zero.”
Daily arrivals in the main port of Makassar were estimated at around 300 tonnes, while in the previous years, arrivals could easily exceed 1,000 tonnes at the peak of the season.
The main crop normally starts in April and peaks in July or August before a smaller crop, also known as the mid-crop, begins in October or November.
Bean counts are used to measure quality. A lower bean count indicates good quality beans, and the national standard for bean counts in Indonesia is 110 beans per 100 grams.
While demand for cocoa butter languished, the product market was supported by cocoa powder, which was steady at between $5,200 and $5,500 a tonne in Southeast Asia.
When processing beans, grinders get butter and cake, which are later pressed into powder. Butter is also used to make spreads and soaps, while powder is used for coatings in chocolate-making, beverages and ice cream. “Powder consumers are consistently booking. But in Europe, powder price is much higher. It’s still trading above $6,000 a tonne,” said a dealer in Singapore.
“Butter is definitely been pressured. Most part of Europe is shut because of the summer holidays, so the question is whether they will start covering some more butter needs for the end of the year or early next year when they come back.”
Chocolate flies off the shelves in the main consuming regions of Europe and North America during Christmas at the end of the year, Valentine’s Day in February, Easter in the spring, and other holidays.
“We hope that demand will come back after the summer holiday is over in Western countries. But I guess powder is sold out for this year’s delivery, so buyers will have to buy at whatever prices,” said a second dealer in Singapore.
“Nobody wants to sell powder at lower prices.”
Butter ratios were likely to be stay at the current range next week, aided by demand for powder ahead of the year-end festive season.
“I don’t expect a big upward pressure on butter. I do think the ratio is going to stay at this range for a little while,’ said the first dealer in Singapore.

“It’s going to take a while to really move significantly away from this price relationship between powder and butter.”
London’s Liffe December cocoa ended up 13 pounds at 1,909 pounds a tonne on Wednesday.

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