Cocoa prices rise on tight supply despite good Africa production

While global cocoa prices are declining due to good production in Africa and problems in the euro zone, Indian cocoa prices are moving up on supply concerns. Global cocoa prices have dropped by more than 30-40% from their highest point on speculation that supplies from West Africa, the world?s biggest producing region, will exceed initial estimates. Lower consumption of chocolates in the euro zone due to continuing and worsening economic problems has added to the pressure.

?Indian cocoa production has been hit by erratic climate. In some parts of Kerala, the crop has been damaged and yield is as less as 30% of the normal,? Shiny George of Indian Organic Farmers Company told FE. , ?Average price for dry cocoa beans have moved up to R170-180 per kg in the Idukki district. Wet beans command R50 per kg. The commodity is in short supply and demand is very good,? she added.

Indian imports more than half of its requirement of cocoa every year with demand for cocoa increasing at a healthy rate of 8% per annum. The Indian chocolate market is worth some R15 billion and has been hailed as offering great potential for Western chocolate manufacturers as the market is still in its early stages.

Procurement prices of cocoa are already high in India as buyers compete for it. Dry beans were selling around R130-140 per kg during December 2009, while wet beans were sold around R38-45 per kg,? Shiny said. During 2008, around the same time, dry cocoa beans fetched around R80 per kg, while wet beans fetched R25-33 per kg, she added.

Meanwhile, in the international market cocoa prices have come down on speculation that supplies from West Africa, the world?s biggest producing region, will exceed initial estimates. From a 32-year high of $3,775 per tonne on March 11

the price declined to $2,157.33 per tonne, according to the International Cocoa Organization.

Indian farmers had a disappointing start with cocoa in the 80s. However, this time cocoa is being promoted more as an inter-crop to coconut and arecanut to spread the risk.

According to the Kochi-based Directorate of Cashew and Cocoa Development (DACCD) sources, Indian cocoa production is likely to cross 17,000 tonne in five years from the present 12,000 tonne. DACCD has plans to bring another 75,000 hectare under cocoa cultivation in the next five years.

DACCD reports show that Indian cocoa production during 2009-10 stands at 12,954 tonne as against 11,820 tonne during 2008-09.

During 2009-10, India imported 4348 tonne of cocoa products. This is considerably lower than 12,022 tonne imported during 2008-09.