Mild Sahara Winds Deepen Cocoa Bear Market as Glut Returnsby and
Weather forecasters point to mild Harmattan this season
Dusty winds that damage crops to arrive next week: MDA, Marex
Cocoa traders shouldn’t count on West Africa’s seasonal desert winds to temper forecasts for abundant supplies and offer them relief from the first bear market in five years.
The Harmattan, winds from the Sahara desert that bring dry weather and coolness to the largest producing countries from December to February, will probably be weak this season, according to forecasters Commodity Weather Group, World Weather Inc. and the Ghana Meteorological Agency. Strong dusty winds can dry out pods and damage crops in West Africa.
While the worst Harmattan in three decades decimated last year’s crop, mild winds this season may help deepen a slump in prices as global supplies are set to beat demand by the largest margin since 201-2011. The commodity has gone from 2015’s best to this year’s worst performer in the Standard & Poor’s GSCI index of 24 raw materials as output rebounds in Ivory Coast and Ghana.
“Last year, Harmattan conditions started in the first couple of days of December and lasted uninterruptedly until the second week of January,” Jonathan Parkman, co-head of agriculture at broker Marex Spectron Group, said by phone. “This year so far we’ve had nothing. I don’t see anything in the weather models for West Africa that we look at that would be bullish.”
Cocoa futures declined 20 percent in London this year, heading for the first annual loss since 2011 as global production is forecast to exceed consumption by 261,000 metric tons, according to KnowledgeCharts, a unit of researcher Commodities Risk Analysis. That reverses a shortage of 128,000 tons a year earlier. Cocoa for March delivery rose 0.2 percent to 1,805 pounds ($2,214) a ton by 10:10 a.m. in London, rebounding from Thursday’s drop of 2.7 percent.
Cocoa purchases in Ghana, the second-biggest grower, increased 22 percent from the start of the season on Oct. 1 through Dec. 1, KnowledgeCharts data showed. While Ivory Coast’s government sees deliveries lagging behind by 13 percent at 650,500 tons for the season through Dec. 18, most traders are assuming a figure of 700,000 tons, Parkman said.
Harmattan conditions are likely to pick up in Ivory Coast and Ghana next week, according to Kyle Tapely, a forecaster at MDA Weather Services. The event will probably last three days at most, according to Marex Spectron, which employs its own meteorologist. Winds will increase in intensity in January even though they won’t be excessively strong, Drew Lerner, president of Overland Park, Kansas-based World Weather, said by phone.
Ivory Coast’s southwestern and coastal areas continued to received rainfall until Dec. 20, even though central regions had turn drier, the nation’s National Meteorological Service said in e-mailed reports. The dry season started about a month later than usual, Lerner said.
Dry weather has only recently started to intensify, unlike in the beginning of December, said Robert Zan, a 47 year-old farmer who owns 13 hectares (32 acres) of cocoa plantations near the town of Mahapleu, in central western Ivory Coast.
“We are hoping for some rain soon otherwise it may complicate the harvest,” he said. “We continue to watch weather developments.”
In Ghana, growing regions “recorded some rainfall in November and December, which gives the soil sufficient moisture,” Charles York, a meteorologist at the Ghana Meteorological Agency, said in an interview in the capital, Accra.
“I have harvested about 18 percent more at the end of November than I did last season,” said Samuel Quainoo, who heads a group of 17,000 farmers near the southwestern town of Enchi, about 466 kilometers (290 miles) from Accra. “It is the prayer of all farmers that the good weather conditions continue.”