ICCO flags threat yet to Africa cocoa output from Harmattan

The International Cocoa Organization acknowledged concerns yet for the extent of damage that the Harmattan will wreak on African cocoa output, even as it unveiled details of reasoning behind its forecast for a – relatively small – world output deficit.

The ICCO late on Friday, in its first estimate for the world production shortfall in 2015-16, forecast a 113,000-tonne shortfall – a turnaround from last season's 42,000-tonne deficit but a less downbeat figure than many other observers expect.

Traders, on average, expect a 145,000-tonne deficit this season, a Reuters poll earlier this month showed.

Details of ICCO thinking show that is more upbeat on hopes for African output, seen flat this season at 3.06m tonnes, than many other observers.

'Does not share pessimistic expectations'

Indeed, for Ghana, the world's second-ranked cocoa producing country, the organisation forecast output of 840,000 tonnes, some 100,000 tonnes more than the Ghana Cocoa Board collected last season.

"The ICCO does not share the pessimistic expectations about the cocoa crop in Ghana," Commerzbank noted.

While Ivory Coast, the top producing country, was seen suffering a 100,000-tonne drop to 1.69m tonnes in output, what would still leave West Africa's key contribution to world supplies unchanged year on year, despite the setback of the dry Harmattan winds arriving apparently at their "strongest in three decades" .

"The dusty seasonal Harmattan winds that normally blow southward from the Sahara Desert into West Africa from December to March, arrived earlier and more intensely than expected, in November," the ICCO said.

However, the group also acknowledged that the Harmattan "is raising concerns for the mid-crop", harvested from April in West Africa, "as uncertainties remain in regard to the extent of the potential damage".

'Low yields are expected'

The ICCO, which underlined the support to Ivory Coast volumes from the selling of crop hoarded by producers from 2014-15, in fact underlined the weather threat from El Nino-inspired dryness to output in South America.

"Production in Ecuador is forecast to drop to a level of 230,000 tonnes for the 2015-16 season, due to El Niño," a decline of some 20,000 tonnes year on year.

In Brazil, where "all the major producing regions are reported to have suffered from drought, and low yields are expected until June," a drop of 20,000 tonnes in output is also expected, to 210,000 tonnes.

'Vulnerable to pests'

Output in Asia's top producer, Indonesia, was forecast showing a similar decline, to 300,000 tonnes – meaning extra imports to meet the country's burgeoning processing industry, seen grinding 370,000 tonnes of cocoa in 2015-16, which started in October.

"The main contributing factor behind this decline [in output] is the dry weather conditions associated with El Niño, which are negatively affecting the cocoa crop," the ICCO said, flagging comments from Indonesian cocoa association Akindo.

"The country has been struggling to increase production in recent years, as most of its trees, which were planted in the 1980s, are ageing," the ICCO added.

"They are consequently more vulnerable to pests and diseases, which are hard to eradicate as a result of the vast network of smallholder cocoa farmers."

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