Indonesian Cocoa Soars On El Nino Overhang

Indonesian cocoa prices soared to a record high on Friday, buoyed by a surge in New York futures overnight as players nervously watched the El Nino weather pattern forming off South America.

Traders said weather conditions over the next two months would determine the size of the smaller mid-crop harvest that usually begins in September and stretches through November.

"By this time of the year, cherries should already be forming but the crop is still at the flowering stage," one trader from the key growing region of Ujung Pandang in South Sulawesi said over the telephone. "But it is too early to tell if this is because of the El Nino effect," he said. "If there is not enough rain in the next two months, the mid-crop harvest might be smaller."

 

An official with the US National Oceanic and Atmospheric Administration (NOAA) said on Tuesday that warm ocean temperatures off the western coast of South America had triggered an El Nino weather pattern that could have a major impact on crop production around the world. El Nino results in drier, warmer weather.

Istiklal Amin of the agriculture ministry's Land and Agriclimate Research Centre said temperatures were normal in Indonesia, which was already experiencing the seasonal drought that will last through September or October.

New York cocoa futures rocketed to a two-month high on Thursday driven by mounting concern that cocoa pod development in leading grower, Ivory Coast, might be off to a poor start.

The July spot contract rose $52 to close at $1,523 a tonne while the September contract climbed $57 to end at $1,571. "It is definitely a bit premature," said a New York-based trader of the El Nino worries. He noted that Asian cocoa production, especially the important Indonesian crop, would be more at risk from El Nino than the West African harvest. (Reuter)