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Cocoa rises on threatened crops

The price of cocoa futures pushed above a two-year high today, as huge rainfalls in Indonesia imperil this year’s crop.

Indonesia is the third largest producer of cocoa in the world, behind Ghana and the Ivory Coast, but its main growing region has collected unseasonable amounts of rain so far this year, with more than double the average rainfall for January falling already this month.

Such vast amounts of precipitation increase the chances of the crop being adversely affected by disease. Heavy rains in 2013 already increased instances of the cocoa pod borer disease, causing the Indonesian Cocoa Association to warn of lower exports in 2014.

The extra rainfall may delay the start of the harvesting season by as much as two months in Sulawesi Island, the main growing region, with the weather possibly interfering with the blossoming process. The quality of beans may also be harmed by overly wet conditions.

The tight supply situation looks likely to coincide with growing demand, driven by higher sales of chocolate: Euromonitor International forecasts global sales will break records this year.

By mid-afternoon in New York, Cocoa futures for March had climbed 0.55% to $2901 a tonne, with a high of 2937, the highest price reached since September 2011.

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