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Local cocoa production may be higher this year than previously forecast, thanks to good weather, and may rise further next year, according to the Indonesian Cocoa Association.

Last year’s harvest was about 480,000 tons.

This year’s crop may total 580,000 to 590,000 metric tons, Halim Razak, chairman of the association, known as Askindo, said on Thursday. That compares with Askindo’s January estimate of 480,000 tons and Razak’s Sept. 25 call for “at least” 500,000 tons. Output in 2010 may be as much as 620,000 tons, he said.

Bigger harvests from the country may curb a 43 percent rally in New York cocoa futures over the past year, potentially reducing costs for companies such as Barry Callebaut AG, the world’s biggest maker of bulk chocolate.

“The weather is good, not too much rain and not too dry, which helps flowering and harvesting,” Razak said, speaking from Makassar in Sulawesi Island, Indonesia’s main cocoa-growing region.

Cocoa for December delivery on the ICE Futures exchange gained for a second day on Wednesday to $3,149 a ton.

“Prices are quite high and that induces farmers to increase output,” Razak said.

However, Indonesian cocoa beans are currently fetching around $200 per ton below market price in the US due to the alleged presence of contaminants.

The International Cocoa Organization has forecast world demand for beans will exceed output by 73,000 tons this year.

Output from Ivory Coast, the world’s largest cocoa producer, fell 16 percent to 1.16 million tons in the season to Sept. 30 and may drop to 1 million tons in the current season.



Bloomberg