By Isis Almeida, Bloomberg Business
Photo: Wikipedia Commons
The harshest Saharan desert winds in two decades are damaging cocoa crops in Ivory Coast, the world’s top-producing country.
The Harmattan, a dust storm that sweeps over West Africa for three months each year, is drying out the soil and slowing the development of cocoa pods. As a result, Ivory Coast, which harvests two annual crops, will see production fall 12 percent in the smaller second harvest, according to a Bloomberg survey of nine traders, brokers, analysts and fund managers.
Less supply could bring a brief turnaround in prices for the chocolate-making ingredient, according to Rabobank International. London-traded futures are at the lowest in nine months after falling 11 percent in January, the biggest decline among agricultural commodities. While there are concerns over how the Harmattan will impact the harvest, people who track the crop development say that the situation is OK, said Jonathan Parkman, co-head of agriculture at Marex Spectron Group.
"What is hard to quantify is the Harmattan, which has been blowing stronger than normal,” London-based Parkman said by phone Wednesday. “The dry season also started earlier, so everybody is worried about what the crop is going to look like in a month’s time." Cocoa prices tumbled this year as funds cut bets on higher prices and signs emerged that the crop in Ghana, the second-biggest producer, is recovering from a five-year low. Futures for March delivery are 2,012 pounds ($2,890) a metric ton on ICE Futures Europe.
Ivorian farmers will harvest 454,000 tons of cocoa during the mid-crop harvest, according to the mean estimate in the Bloomberg survey. That’s down from 514,000 tons a year earlier, ICCO data showed. Responses ranged from as low as 350,000 tons to 550,000 tons.
“The Harmattan is pretty bad this year,” said Laurent Pipitone, director of the economics and statistics division at the International Cocoa Organization. While the ICCO is still analyzing how strong the winds were this season and the impact on crops, Pipitone said the winds may be the strongest in about two decades.
There’s still some time before the mid-crop harvest begins in April and bean deliveries to ports are so far beating expectations, according to Rabobank.
The Harmattan, which started earlier than usual this season, prompted Rabobank to cut its estimate for Ivory Coast’s total output by almost 2 percent to 1.67 million tons, said Carlos Mera, an analyst at the bank in London.
Most of Ivory Coast got 50 percent less rain than normal from Dec. 1 through Wednesday and almost no rain fell in Ghana, said Kyle Tapley, a forecaster at MDA Weather Services. While there was some precipitation in coastal areas of Ivory Coast last week, inland parts remained dry, Speedwell Weather said Tuesday. It forecasts more dryness into the first week of February.