Cocoa prices steady in Malaysia
Cocoa prices steady in Malaysia
KUALA LUMPUR (Reuters): Cocoa prices remained firm in Malaysia
and Indonesia yesterday, with supply remaining tight amid dry
weather conditions in key growing areas, traders said.
Firmer cocoa futures in New York on Tuesday also supported
prices, they said.
"The dry weather has been the contributing factor to the very
low yield. There's hardly any crop," said a cocoa grower in
Tawau, Malaysia's key cocoa-growing region in the eastern state
of Sabah.
A drought induced by the El Nino weather pattern has destroyed
most of Malaysia's mid-crop between October and December, leaving
virtually no cocoa beans to harvest in the current period,
traders said.
Growers said the drought had also delayed the new crop.
"Flowering has only just started instead of the normal
September-October period," the grower in Tawau said.
An official of the Malaysian Cocoa Board has said he expects a
40 to 50 percent fall in this year's production compared to last
year's 120,000 tons.
Traders said cocoa prices in Malaysia have also been kept high
by the weakness of the Malaysian ringgit against both the U.S.
dollar and sterling.
The dollar has gained 32 percent and the sterling 36 percent
in value against the ringgit since early July.
On Wednesday, the Malaysian Cocoa Board (MCB) quoted the SMC
1A grade out of Tawau at an average of 4,940 ringgit ($1,497) a
ton, up 139 ringgit from a week ago.
The SMC 1B grade from Tawau was priced at an average of 4,850
a ton, up 94 ringgit from a week ago.
In Indonesia, dry weather conditions also prevailed in the key
growing region of South Sulawesi, traders said.
"There have been brief, scattered showers in some parts but
nothing meaningful," one trader from the region's provincial
capital Ujung Pandang said.
Traders said 1998 production remained under a cloud due to a
severe drought linked to the El Nino weather pattern sweeping
across the Indonesian archipelago.
"I see production declining sharply next year if there is no
rain over the next two months," one trader said. "There could
also possibly be a delay in next year's harvest."
Traders said bean size was smaller because of the drought,
adding that they were getting an average of 130 beans per 100
grams, while the acceptable standard was 110 beans.
"There are plenty of small-sized beans coming into the market,
and this could pose problems with foreign buyers," one trader
said. "They (buyers) might want lower prices."
Traders said fair, average quality beans were quoted at 5,200-
5,250 rupiah/kg at Ujung Pandang, unchanged from a week ago.