Southeast Asian cocoa prices were higher on Wednesday, tracking gains in New York overnight, with supply running thin at the tailend of the smaller mid-crop harvest in both Indonesia and Malaysia, regional traders said. They said the Indonesian market was continuing to get small-sized and poor quality beans, with some traders turning consignments down for fear of rejection by importers.
"I have been getting as many as 140 beans per 100 grams," one trader from Ujung Pandang, capital of the main growing area of South Sulawesi, said by telephone.
"I have been rejecting them because I might have problems with my buyers in the United States," he said, adding that the standard quality was 110 beans per 100 grams. Traders said buyers were entitled to a 0.2 per cent discount on the price for every bean above the standard.
"If there are 120 beans per 100 gram, that means a two per cent discount, which is a lot considering our margin," one trader said. "But some traders are buying the small beans because they are mixing them with regular sized ones."
Another trader said he had an arrangement with his suppliers to withhold 20 per cent of the purchase price if the beans are below standard size. "My suppliers have to replace the amount of small beans I buy from them with standard sized beans. If they don't, they don't get the remaining 20 per cent of their payment," he said.
Traders also said they expected a delay in next year's harvest because of late flowering in the wake of a severe drought in South Sulawesi and other parts of Indonesia. "By this time of the year, the trees should be flowering, but they are not in many places," one trader said. "The harvest next year will only come in June instead of April."
The trader also said she expected 1998 production to average at 320,000 tonne, against her estimate of 310,000 this year. (Reuters)
