Cocoa prices drop in RI, gain in Malaysia
Cocoa prices drop in RI, gain in Malaysia
KUALA LUMPUR (Reuter): Southeast Asian cocoa prices were mixed this week, with rates in Malaysia up due to a weak ringgit while those in Indonesia followed the downtrend on the New York CSCE cocoa futures, trade sources said yesterday.
Malaysian cocoa grinders said there were sufficient cocoa beans in the domestic market to meet their immediate grinding needs despite a poor initial harvest between April and June.
Indonesian traders, meanwhile, cited tight supply due to an equally small harvest this time of the year.
"We have enough beans for the moment because we've imported quite a bit from Sulawesi (in Indonesia) and other places," said a senior executive at a cocoa grinding factory in Malaysia's southern Johor state.
"But the price has been quite rocky because of the adjustments being made to the ringgit," he added.
The ringgit, like other Southeast Asian currencies, has been hit by speculative attacks over the past month, losing more than 11 percent of its value against the U.S. dollar.
Money market dealers said the Malaysian currency was expected to remain under selling pressure as Prime Minister Mahathir Mohamad's government indicated recently that it was comfortable with the level of the ringgit.
At 0800 GMT yesterday, the ringgit was quoted in Kuala Lumpur at 2.7760 to one dollar.
The Malaysian Cocoa Board, meanwhile, priced the SMC 1A grade out of Tawau, the country's main cocoa growing area, at 3,700 ringgit ($1,325) a ton yesterday.
The price was up 22 ringgit from Tuesday and 200 ringgit from a week ago.
The board also quoted the SMC 1B grade out of Tawau at 3,650 ringgit, up 12 ringgit from Tuesday and 200 ringgit from a week ago.
Indonesian cocoa prices were easier in line with the overnight fall in New York futures, traders said.
"The market is quiet, except for some short-covering by players trying to fill contracts," one trader said.
"The players are short by about 2,000 tons and are willing to pay premium prices because supply is tight," he added.
The traders said they were expecting the smaller mid-crop harvest to begin next month in the key growing region of South Sulawesi, which produces about 30 percent of the annual output.
The Indonesian Cocoa Association has forecast total 1997 production at 319,000-330,000 tons, up 10 percent from 1996.
"The weather is continuing to be dry, and there is a likelihood the mid-crop will be smaller than usual," another trader said. "The beans coming to Ujung Pandang (capital of South Sulawesi) are smaller in size and of poor quality."
Traders said fair, average quality (FAQ) cocoa was quoted at 3,450-3,470 rupiah/kg, compared with 3,475-3,500 rupiah on Tuesday, and 3,350-3,420 a week ago.