Ivory Coast and Ghana, the world’s largest cocoa producers, will get rains over the next six days, potentially helping crop development, according to the National Oceanic and Atmospheric Administration.
Most of Ivory Coast will get at least 30 millimeters (1.2 inches) of rain by May 1, while most of Ghana will get at least 20 millimeters, data on the NOAA’s website shows. That may boost crop development after dry weather from December through January. Output in both countries accounted for 69 percent of total global production last season, according to the International Cocoa Organization in London.
The lack of rainfall earlier this year will delay the start of the smaller of two annual harvests in Ivory Coast, according to Macquarie Group Ltd. The mid-crop is expected to begin in June, as opposed to April, as pods aren’t big enough, Kona Haque, an analyst at the bank in London, said last week.
Cocoa climbed as much as 4.9 percent in New York and 4 percent in London yesterday. The London market moved into a so-called backwardation, with the July contract trading above the later dated ones through the May 2013 futures. Backwardation is a market structure that may signal limited supplies.
The delay to the start of the mid-crop may be “starting to work its way into the marketplace and force some to roll hedges a bit further down the curve,” Drew Geraghty, a broker at ICAP Futures LLC in Jersey City, New Jersey, said in a report e-mailed yesterday. “Many are pointing to concerns over the logistics for fourth quarter cocoa as Ivory Coast will be in its first season of forward sales.”
Ivory Coast plans to sell 70 percent of its 2012-13 crop before it is harvested as part of wider industry changes. These include a price guarantee to farmers that is 50 percent to 60 percent of international rates. The so-called forward sales started on Jan. 31 and the new season will begin in October.