Disease a worry for cocoa output in Brazil - but not Cote d'Ivoire

01.12.2016

The shortfall in cocoa deliveries from growers in Cote d'Ivoire, the top producing country, looks a sign of low stocks rather than disease - although fungal infections are taking a toll in Brazil, the International Cocoa Organization said.

The ICCO acknowledged that in Cote d'Ivoire, now amid its main crop harvest for 2016-17, black pod disease "has been reported in some producing areas".

However, "cocoa farmers are optimistic that output will recover due to the current favourable weather conditions".

Indeed, a shortfall in bean deliveries to Cote d'Ivoire ports since the beginning of the 2016-17 season at the start of October was down to a hangover from last season's weather-reduced harvest, rather than ideas of a weak result this time.

While new marketing years often bring a spurt in deliveries of beans producers have held over in the hope that the new season will bring a rise in guaranteed prices from Cote d'Ivoire's regulator, this time, thanks to the poor 2015-16 crop, there were less crop to hold over.

"Due to the shortage of beans in the previous season, this occurrence [of carrying over beans] may not have taken place to a large extent, resulting in the… reduced output" implied by lower deliveries to merchants.

As of November 20, arrivals of beans to Cote d'Ivoire ports so far this season were, at 387,000 tonnes, down 16% year on year.

'Outbreak of the Witches' Broom disease'

The ICCO was also upbeat over prospects for Nigerian output saying that "improved weather conditions are reported to be favouring the 2016-17 main crop", although weakness in the country's currency, the naira, has prompted concerns over the raised expense of imported inputs such as agrichemicals.

ICCO world cocoa estimates, 2015-16, change on previous figure and (year on year)

Production: 4.031m tonnes, +43,000 tonnes, (-217,000 tonnes)

Grindings: 4.141m tonnes, -19,000 tonnes, (-13,000 tonnes)

Output surplus: -150,000 tonnes, +62,000 tonnes (-202,000 tonnes)

End-of--season stocks: 1.447m tonnes, +71,000 tonnes, (-150,000 tonnes)

However, the ICCO was less upbeat on a recovery in Brazilian coffee output, after a slide of 39% to 140,000 tonnes in production last season, thanks to drought in some major growing areas, such as the north eastern state of Bahia.

Speaking of 2016-17 prospects, the organisation said that "rainfalls are reported to be delaying the ripening of the cocoa pods, hampering the drying of the beans and resulting in an outbreak of the Witches' Broom disease", a fungal infection which can cause severe yield losses.

'Rising at a strong pace'

The comments came as the ICCO slashed by 62,000 tonnes to 150,000 tonnes its estimate for the world cocoa production deficit last season, citing in part ideas that Cote d'Ivoire output had not fallen as far as had been thought, besides improved estimates for Peruvian and Indonesian crops.

"Cocoa production in Peru is rising at a strong pace, reaching 95,000 tonnes in the 2015-16 season," a 10,000-tonne upgrade.

Indonesian output was upgraded, again, this time by 20,000 tonnes to 350,000 tonnes, "despite an occurrence of an El Niсo weather phenomenon" which, in curtailing rainfall, is typically viewed as a threat to cocoa output, as it is of many others agricultural commodities, such as palm oil.

'Processing expected to rebound'

However, the ICCO also cut estimates for world cocoa consumption last season, by 29,000 tonnes to 4.14m tonnes, ditching ideas of a year-on-year rise in the global grind.

The downgrade reflected in part data from regional industry groups which, for example, prompted a 12,000-tonne cut to 398,000 tonnes in the estimate for the US cocoa grind last season.

However, the organisation also stressed the hit to the Cote d'Ivoire processors from the weak harvest, with the country's grind downgraded by 18,000 tonnes to 492,000 tonnes – a drop of 66,000 tonnes year on year.

"Cocoa processing in Africa slowed down due to the slump in the availability of cocoa beans to processors in the West African region."

However, with Cote d'Ivoire's government cutting taxes on exports of bean processing products, such as cocoa butter and cocoa mass, and earmarking 400,000 tonnes of the mid-crop harvest for local grinders, local demand was expected – like production - to recover.

"Processing in Cфte d'Ivoire is expected to rebound during the 2016-17 season."


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