The cocoa crop in parts of Ivory Coast, the world’s largest producer of the beans used to make chocolate, looks normal at the start of the 2012-13 season that began this month, according to Fuchs & Hoffmann GmbH.
The south-western Soubre region, including the coastal towns of San Pedro, Tabou and Sassandra, usually produces about 300,000 metric tons of beans a year. The central-western Daloa region, the country’s biggest cocoa area geographically, grows about the same. Ivory Coast’s output will be 1.45 million tons in 2012-13, little changed from 1.46 million tons in 2011-12, according to KnowledgeCharts, a unit of researcher Commodities Risk Analysis LC in Bethlehem, Pennsylvania.
“It looks to me as a normal crop, but I only know the area around San Pedro and the north of San Pedro up to the city of Man,” Olaf Reichardt, managing director of Fuchs & Hoffmann, owned by Bergisch Gladbach, Germany-based Kruger GmbH & Co., said by phone on Oct. 19, during a visit to Ivory Coast that included San Pedro, Sassandra, Gagnoa, Daloa, Soubre and Man. “I don’t have big impressions from the region near Ghana.”
Cocoa has climbed 15 percent in London so far this year on speculation dry weather in West Africa, which accounts for about 70 percent of the world’s production, would cut output in 2012-13. The beans also rallied as investors bet a reworking of the cocoa sector in Ivory Coast would result in shipment delays.
Ivory Coast is implementing changes that include setting up a government-controlled regulator, selling 70 to 80 percent of the crops before the season starts and a price guarantee to farmers. The season is off to a slow start because of delays in obtaining funds from domestic banks who lend to buyers to purchase the beans, Leon Adou Edoukou, a farmer and head of a cooperative in Abengourou in eastern Ivory Coast, said by phone on Oct. 15.
“Some cocoa is already arriving but at the moment the biggest struggle here is that the new system is not fully set in place,” Reichardt said. “If you get a very early main crop, then you see a lot of cocoa at the start of October, but even a normal main crop can start in the beginning of November.”
Cocoa supplies outpaced demand by 10,000 tons to 40,000 tons in the 2011-12 season because of a drop in bean processing in Europe and North America, Reichardt said. That follows a surplus of 350,000 tons to 360,000 tons in 2010-11, he added. Global cocoa production was estimated at 3.69 million tons in 2011-12, according to the International Cocoa Organization.
“We are having 10 percent of the world crop as a surplus out of the last two years and not an encouraging grind,” he said. “It doesn’t look like we are having a supply issue.”
European cocoa bean processing fell 18 percent in the second quarter and 16 percent in the third, according to the European Cocoa Association. In the U.S., grindings dropped 9.8 percent and 2.2 percent respectively, data from the Washington- based National Confectioners Association showed.
“With European grind down, there isn’t really a problem at the moment,” Reichardt said. There are many more beans in Europe than are needed, he said.
To contact the editor responsible for this story: Claudia Carpenter at Ccarpenter2@bloomberg.net.