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Indonesia Cocoa: Makassar eyes 15kt March arrivals

JAKARTA: An early harvest is expected to produce at least 15,000 tonnes of cocoa beans in March at Indonesia's main export port in South Sulawesi, traders said on Monday.

"Harvest has started earlier than expected. The weather is pretty good for the crop, but this year's output has been affected by pod borer," said one trader in Makassar, capital of South Sulawesi.

"I think arrivals will reach 15,000 tonnes in March," he said. Makassar is Indonesia's main export port for cocoa.

But traders said the early arrivals, coupled with a weaker currency in coming weeks could undermine prices after last week's gains.

Traders had earlier expected harvesting in the world's third largest producer to start in April. While some beans have entered the market, many traders said their stocks remained tight.

"Trading is very dull and quiet. I don't even know how prices are quoted in the local market because beans are nowhere to be found," said another trader in Makassar.

SHIPMENT TO BRAZIL

Other traders, however, said they still had enough stocks to fulfill their commitments.

"We shipped some 5,000 tonnes of beans to Brazil recently. I don't think we have a problem with stocks, especially because harvests have started," said a third trader.

Brazil's cocoa processors periodically import beans from other countries -- Ivory Coast, Indonesia and Ghana -- to meet demand .

Brazil's Bahia Commercial Association said last month the country's cocoa processors had imported 75,331 tonnes of beans from overseas suppliers in 1999, a sharp increase from the 11,948 tonnes bought in 1998.

The Sulawesi chapter of the Indonesian Cocoa Association (Askindo) has said the country's cocoa production was expected to stay flat at around 360,000 tonnes in 2000 because the spread of pod borer had intensified. The worm-like pest, which damages the crop by entering the cocoa beans and feeding upon them, has spread in South, Central and Southeast Sulawesi, which account for 75 percent of the country's cocoa production.

PRICES UP, BUT SEEN RETREATING

Average cocoa beans for lifting in Makassar were quoted at a local price of 4,800/4,900 rupiah/kg, up from 4,500/4,600 last week.

But expectations of a correction in the benchmark New York market and the increased supply from early harvest arrivals in Makassar would undermine prices soon, traders said.

CSCE May CCKO cocoa fell $3 per tonne on Friday to settle at $849.

"It seems the New York market will see a correction after some gains early last week. The arrival of the new crop and a possible strengthening of the rupiah will further dampen sentiment," said the first trader.

He said differentials for Sulawesi were quoted at $150/tonne under New York for May beans, compared with $130 last week.

The rupiah softened in early trade on Monday and traders said they expected the currency to weaken during the next few weeks as corporates buy dollars ahead of the end of the fiscal year.

It was quoted at 7,387/7,397 against the dollar.

But beyond March the currency could find some strength from the government's completion of the sale of its 40 percent stake in auto giant PT Astra International Tbk.

They also said the rupiah's long-term outlook remained steady amid hopes about continued economic recovery. -Reuters