Adverse weather and hoarding in Ivory Coast could see sales of the top cocoa producer's largest export fall some way short of consensus, which could push global prices higher, traders said.
Cocoa futures on ICE are near their highest in three years as overly dry, hot winds have damaged the crop outlook in Ivory Coast, which grows around 40% of the world's cocoa.
"Everyone knows the mid-crop this year is going to be a nightmare," a Swiss-based trader told Reuters. "The weather has been dry (and) people are not selling what they promised to sell because they're hoping for higher prices."
Nine Ivory Coast exporters and buyers said they expect port arrivals for the April to September mid-crop to reach just 350,000-400,000 tonnes. This compares with official data of 527,000 tonnes last mid-crop and is well short of forecasts.
"Mid-crop arrivals should be between 450,000-500,000, that is what people are expecting," Marex Spectron deputy head of agriculture Jonathan Parkman, who has been involved in cocoa for almost four decades, said.
Living Income Differential
Ivory Coast, along with its neighbour Ghana, has introduced a $400 a tonne living income differential or premium for its 2020/21 cocoa sales in a bid to guarantee higher prices for farmers and combat pervasive poverty.
This has prompted local dealers waiting for next season's price hike to hoard stock and even default.
"We're not going to get any (supplies) in August and September, they're all going to hold onto their cocoa because they want to sell it next season," a France-based trader said.
Adverse weather is having an impact on the tail end of the October to March main crop, with Ivory Coast exporters and buyers now expecting port arrivals at 1.58 million tonnes from a previously forecast 1.69 million.
Last season's main crop was 1.652 million tonnes, official data shows.
'Lack Of Rain'
"Our counting teams have noted since January that production will be down compared to last season following the lack of rain," said an Ivory Coast-based director of a European export company.
If the main and mid-crop forecasts of Ivorian buyers and exporters prove true, total arrivals this season would come to 2 million tonnes maximum. Last season's arrivals totalled 2.18 million, according to official figures.
A Reuters poll last month forecast 2019/20 Ivorian output of 2.2 million tonnes, but locals are sceptical.
"I'm looking for 5,000 tonnes of (cocoa) before March but I don't think I'll (get) it. There is not much left," an Ivory Coast based exporter said.
News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.
