Ivory Coast Poised for Second-Biggest Cocoa Mid-Crop

Cocoa farmers in Ivory Coast, the world’s largest grower, may harvest the second-biggest mid-crop ever partly because of a wetter dry season than last year.

The smaller of two annual harvests that usually starts in the West African nation in April will probably come to 442,000 metric tons, the mean in a Bloomberg survey of nine traders, brokers and analysts showed. That would be the second-highest since at least the 2003-04 season, according to estimates provided by the London-based International Cocoa Organization. The mid-crop was a record 472,000 tons in 2010-11.

Ivory Coast’s central-western Daloa region, with average annual production of about 300,000 tons, got four times more rainfall from Jan. 1 to Feb. 20 than a year earlier, according to the country’s National Meteorological Service. The Soubre region produces about the same amount and is home to the town of Tabou, which got 55 percent more rain in the period, while Sasandra got 8 percent more and precipitation in San Pedro was 71 percent lower than a year earlier, the weather data showed.

“The weather has been a great deal better than it may have seemed,” Jonathan Parkman, co-head of agriculture at Marex Spectron Group in London, said by phone from London yesterday. “It’s been a benign dry season and the crop development has been good, so we are expending trend to above-trend mid-crops. The crucial bit is how the weather holds during March, which is normally what determines the outcome of the mid-crop.”

Cocoa futures traded in New York gained 21 percent last year and advanced another 8.2 percent in 2014 as demand is set to outstrip supplies. The commodity was last year’s second-best performer in the Standard & Poor’s GSCI index of 24 raw materials. Shortages are forecast at 115,000 tons in the 2013-14 season that started in October after a deficit of 174,000 tons the previous season, estimates the ICCO.

Bean Hoarding

Supplies from the mid-crop may not reach the market as farmers and middlemen hold back beans to sell at higher prices during the next main crop, said Parkman. Ivory Coast’s industry regulator paid 50 CFA francs ($0.10) a kilogram (2.2 pounds) more for the current main crop than it did for the previous mid-crop, prompting bean hoarding, according to Lome, Togo-based lender Ecobank Transnational Inc., which finances the trade.

“The farmer price for next year is going up, so who wants to give cocoa against the mid-crop when by holding for the next couple of months, you might get a lot more money for it?” Parkman said. “There’s a very major risk that the mid-crop may not be as commercialized as one would expect.”

Minimum Price

Ivory Coast implemented changes to its cocoa sector in 2012 that include selling as much as 80 percent of the crop before the harvest starts and a guaranteed price to farmers that is 60 percent of the international level. The minimum price is usually announced before the start of the season.

A futures rally this year and in 2013 probably mean sales of the 2014-15 crop are being made at higher prices, which in turn will be reflected in the minimum farmer price for the main crop. Ivory Coast will produce 1.55 million tons of cocoa in 2013-14, up from 1.45 million tons a year earlier, according to the ICCO.

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