Local cocoa bean exports set to rise

Local cocoa bean exports set to rise

KUALA LUMPUR (Reuters): Malaysia's imports of cocoa
beans, particularly from Indonesia, are expected to increase
this year following a poor mid-crop in main producer Sabah
state on Borneo island.

Malaysian cocoa grinders bought 40,000-50,000 tons of
Indonesian beans last year to make up for the shortfall in
local output.

"It's difficult to say how much beans will come in, but it
certainly will be more than last year," said a trader at a
Malaysian grinder. He said Malaysian grinders have been buying
beans from Indonesia's Sulawesi as Sabah's crop turned out to be
less than initially expected.

"The April/May crop did not do well, probably because of
heavier than normal rainfall and an extremely good main crop at
the end of last year,"said a cocoa grower in Sabah.

He said the cocoa growing region had received 15 percent
to 20 percent more rain than normal.

Traders said that unless there was a bumper crop at the
end of the year, Malaysia's production in 1999 might not rise
much from some 90,000 tons seen last year.

Traders said some grinders have increased capacity use
although grinding was still not up to total capacity of about
140,000 tons. Grinding activity had dwindled to 70,000-80,000
tons in 1998.

"Capacity use has to be increased because of cost... economies
of scale," said another trader at a local grinder.

Physical trade has been slow as sellers were holding back from
selling due to low prices although the market had recovered
strongly recently, traders said.

On Thursday, the Malaysian Cocoa Board quoted Standard
Malaysian Cocoa (SMC) 1A out of Tawau at an average 3,750 ringgit
a ton compared with 3,150 ringgit a week ago. It fell to below
3,000 ringgit a ton at the end of May.

Traders said differential for Sabah beans was at about 135
pounds a ton under London prices.

"But I think this is temporary. At the rate the market is
going up, the differential would widen again, probably back to
150-155 FOB,"a trader said.