Fertilizer Markets and Finance

Weather concerns, which have boosted grain and sugar markets, may send cocoa prices higher too, thanks to the growing risk of an El Nino weather pattern, Rabobank said.

The bank nudged higher its forecasts for New York cocoa futures, estimating the spot contract will average $2,650 a tonne in the first quarter of 2013, nearly $400 a tonne more than investors are factoring in.

The estimate reflected in part a hangover from cocoa futures’ worst performance in five years, in terms of the six-month average values, in the first half of 2012, with prices received by growers in Ivory Coast, the top producing country, 30-50% below those in early 2010.

“Falling farmgate prices are not supportive for production, as fewer inputs are used and husbandry suffers,” Rabobank analysts said, noting that Ivory Coast cocoa output growth is half the average of 3.0% in years following declines in international values.

With heavy rains encouraging fungal disease in West Africa, “pruning is required to ensure fewer fungal problems, but prices do not support increase farmer labour”.

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