Reuters - SINGAPORE: Cocoa harvests gained pace in Indonesia despite worries about quality, while butter prices weakened further as shipments from Ivory Coast recovered after the end of a deadly post-election conflict, dealers said on Friday.
Indonesia, the world's third-largest cocoa producer after Ivory Coast and Ghana, could see this year's output flat at 600,000 tonnes due to extreme weather triggered by the La Nina weather phenomenon.
Daily arrivals were steady at 250 tonnes in the main export port of Makassar, the provincial capital of South Sulawesi, but the amount could easily reach 500 tonnes in the past years, especially when harvesting starts to pick up.
"The crop started in late April but we don't see many beans around in the past month. The weather has been extreme. It could be very hot, and it could also be extremely wet," said a dealer in Makassar, who trades beans to Malaysia and Brazil.
"Quality is fairly good, but we don't know what will happen at the end of July or August. Past experience shows we'll normally have problems with bean counts at the end of the harvest. Currently, the bean counts are OK, at between 110 and 115."
Bean counts are used to measure quality. A lower bean count indicates good quality beans, and the national standard for bean counts in Indonesia is 110 beans per 100 grams.
Indonesia mainly exports beans to Malaysia, the United States and Brazil. The provinces of South, Central and Southeast Sulawesi account for about 75 percent of Indonesia's cocoa output.
Dealers noted regular shipments to Malaysia, which is Asia's largest grinder, but a drop in butter prices suggested the product market was under pressure from a lack of interest from chocolate makers.
Cocoa butter, a key ingredient for making chocolates, was offered at a ratio of 1.20 times London futures, down from 1.25 times a month ago. Powder prices were steady at around $5,000 a tonne, with a few deals reported.
"I think the ratios are still in the region of 1.20 times London but I also heard that some people are willing to sell butter at lower levels," said a dealer in Singapore.
"People want to throw away butter at lower ratios to generate cash. But the demand is not good."
When processing beans, grinders get butter and cake, which are later pressed into powder. Butter is also used to make spreads and soaps, while powder is used for coatings in chocolate-making, beverages and ice cream.
Liffe September cocoa rose 24 pounds to settle at 1,983 pounds a tonne on Thursday.
While harvests in Sulawesi will pick up next week, chocolate makers could be waiting for butter ratios to fall further before making new purchases.
Ratios jumped to 1.40 times in January on concerns that Ivory Coast growers might honour a call for a ban on bean exports after a disputed election re-ignited a 2002-3 civil war.
But the Ivorian cocoa sector is recovering from the conflict, which saw the suspension of exports and a build-up of nearly half-a-million tonnes of beans in warehouses. The conflict had sparked fears of disruptions in grindings.
Ivory Coast has shipped half of the roughly 470,000 tonnes of cocoa that had been blocked at the top growers' ports by a post-election conflict that ended in April, a top official at industry regulator BCC said on Tuesday.
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