Drought, violence threaten RI's cocoa output

Drought, violence threaten RI's cocoa output

SINGAPORE (Reuters): Indonesia's cocoa output may fall this year to less than 340,000 tons, possibly as low as 300,000, because of drought, violence in growing regions, pests and rising fertilizer prices, traders said on Wednesday.

Indonesia, the world's third largest producer of cocoa after Ivory Coast and Ghana, produced 362,000 tons last year.

Dry spells in the key growing area of Sulawesi were damaging flowers ahead of the mid crop in September/October, traders said.

Months of fighting between Muslims and Christians in Poso district, which accounts for 40 percent of cocoa output in central Sulawesi, have also disrupted plantation work.

"According to my estimates, Indonesia can only produce 300,000 tons of beans," said one trader in Makassar, capital of South Sulawesi.

The absence of rains in Sulawesi for nearly two months and a shorter main crop could hit this year's production. There is also talk that the El Nino weather phenomenon, which causes drought, has returned to the region.

"We have expected El Nino to return this year. We may see a severe drought in August through November," said the Makassar- based trader.

The main crop, which starts in March/April in Sulawesi, normally ends in September, but traders said the harvest was already at its tail-end due to poor maintenance and pod borers.

"I haven't seen rain in the past 50 days. We still have some beans from the main crop, but daily arrivals have fallen to 200 tons from 300 tons last week because the main crop has almost ended," another trader in Makassar said. "I am sure production will be less than 340,000 tons this year because pod borer is rampant. Prices of fertilizer are high, which discourages people from taking care of their crop."

Due to the volatile rupiah, prices of urea fertilizer in crisis-hit Indonesia hovered around 55,500 rupiah ($4.92) per 50 kg this month, versus around 53,000 rupiah last month. There is talk that prices of fertilizer could rise by 30 percent soon.

Sulawesi traders said differentials widened to $120 a ton on Wednesday from $105 for September beans because of losses in New York on Tuesday, when active September ended down $9 at $898 a ton.

In Malaysia's growing area of Sabah, some growers said they were cautious about prospects for this year's main crop, which started in October.

"The weather is okay but we don't understand why there are only a few flowers on the trees," said one trader in Tawau, a key growing area in Sabah on Borneo.

The official Malaysian Cocoa Board expects output to rise to up to 80,000 tons this year from 70,262 in 2000 because of higher yields. Traders expected output to hit only 60,000 tons.