Cocoa exports from the world's No 3 producer Indonesia fell more than 60 percent in September, declining for a seventh month in a row, after wet weather earlier in the year damaged the main crop and triggered an outbreak of a deadly fungal disease.
Fewer shipments from Indonesia could take some pressure off New York cocoa futures, which ended the third quarter down 17.7 percent - its weakest performance in three years - on concerns about the health of the global economy.
Exports from the main growing island of Sulawesi fell to 7,388.28 tonnes in September from 18,849 tonnes a year earlier, industry data showed on Monday, extending declines since March after the Vascular-streak Dieback (VSD) disease spread across plantations.
VSD is the latest in a series of pest and disease risks Indonesia has battled for years to eradicate, among them the cocoa pod borer, which has persisted since the 1980s. Market players are now turning their attention to the smaller crop, widely known as mid-crop, in October which could yield better beans if the weather remains favourable until the end of this year.
Indonesia accounts for about 10 percent of global cocoa output. "Right now there is not much cocoa available because the crop is very disappointing this year, and also some of this cocoa is going to local grinders," said Dakhri Sanusi, secretary of the Sulawesi chapter of the Indonesian Cocoa Association (Askindo).
"The mid-crop is not bad - only the main crop for May-July is really bad," said Dakhri. Wet weather wreaked havoc on the crop in early 2011 and brought back the VSD disease which killed trees in plantations across Sulawesi. The mid-crop will last through the end of December or early January, and there are worries the La Nina weather anomaly could return and bring heavy rains.
"It is not a surprise because for cocoa production in Indonesia, we know that the weather hasn't been the best for the cocoa plant," said Lynette Tan, an analyst at Phillip Futures in Singapore. "We already expect that cocoa exports will probably be down due to this. We see La Nina coming back, and we know that for La Nina in this region it will probably be wet, so not supportive of crop production."
Indonesia launched a $350 million programme in 2009 to boost cocoa production to more than 600,000 tonnes within four to five years. But it has yet to show results, with bad weather, growers' failure to follow advice on planting techniques and mismanagement working against the campaign. Instead of rising, output is likely to plunge more than 30 percent to around 400,000 tonnes this year, but Askindo expects a recovery next year, with output forecast to rise to 660,000 tonnes.