A cocoa shortage may be on the horizon due to dry weather affecting the mid-season bean harvests in the Ivory Coast, the African nation and largest producer (37%) of cocoa beans in the world. The export of cocoa beans is prohibited when they are too small to satisfy a ratio of 120 beans per 100 grams during this second harvest (the ratio is 100 beans:100 grams for the primary October-March harvest), a determination established by the regulatory Cocoa-Coffee Council. Due to unusually dry conditions, Ivory Coast cocoa beans are smaller, taking 140 to 150 beans to measure 100 grams.

Farmers are reporting an inability to sell their products, which has caused a near 10% rise in cocoa futures this year and speculation that the beans may be sold illegally, as rising global demand for cocoa only serves to entice the impoverished farms. But this weather-related shortage also serves as a reminder of how important forecasting of all types can be to ensuring a healthy supply chain.

Analysts already crunch every economic figure available to forecast and predict every optimal financial scenario in an attempt to manage costs, and each market's political climates and socioeconomic trends are studied as well to capitalize on a trend, like the surge of foreign investment in the U.S. due to the weakened dollar in the late '00s, or the shifting of manufacturing out of China due to a changing labor situation. At Source One, we are seeing a surge of forecast-related business moves due to disaster readiness concerns, as we are contacted daily by current and future clients looking to capitalize on our success in Mexico and Latin America -- regions that provide relative security from natural disasters while also providing low cost manufacturing.

By extension, weather forecasting should begin playing a larger role in supply chain analysis, as the U.S. Department of Commerce estimates more than one-third of U.S. economic activity is affected by weather and forecasting technology is getting better with long-term predictions with every hardware upgrade. Using these increasingly accurate long-term forecasts, organizations are better able to predict and control energy costs, agricultural output and costs, and even retail forecasts based on weather-determined product preferences.This is in addition to the increased accuracy and effectiveness of weather-related disaster readiness planning.

Because it allows organizations to avoid pending natural disasters like the hard drive-rarifying Asian flooding of 2012, and because it is becoming increasingly accurate, expect weather forecasting to play an even larger role in supply chain analysis.
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Nicholas Hamner

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