The International Cocoa Organization (ICCO) has revised its estimate for the 2013/14 cocoa season and now expects a slightly larger supply surplus.
Confectioners such as Nestlé and Mondelēz recently complained that rising cocoa prices were denting performance of their chocolate businesses due to increased input costs, particularly for cocoa.
The industry may be offered some relief as the ICCO now forecasts a 40,000 metric ton (MT) surplus for 2013/14.
During the World Cocoa Conference in Amsterdam in June, the organization previously said it expected a 30,000 MT surplus. Earlier in the year, it had forecast a 75,000 MT deficit for the season.
Laurent Pipitone, director of the ICCO’s economic division, told ConfectioneryNews that the mid-crop (April-September) was better than expected in Côte d’Ivoire and Ghana, which together account for around three quarters of global production.
Cocoa production - 4.345m MT (+10 on last crop year and highest on record)
Cocoa grindings - 4.262m MT (+3.7% on last crop year)
Origin grindings – 1.9m MT (+6% on last crop year)
Deficit/surplus – 40,000 MT
“The weather conditions were good and conducive to cocoa production,” he said.
The average daily cocoa price in August was $3,270 per MT, 32% higher than the same period last year, according to the ICCO.
We asked Pipitone if prices would now fall. “This probably provide some release for the chocolate companies and probably lower prices. But we won’t necessarily have a reduction – we still have a deficit for the coming season.
The ICCO expects a deficit slightly under 100,000 MT for the next crop year, 2014/15, as production struggles to keep up with rising demand for cocoa in emerging economies in Asia and Latin America.
The 2014 Ebola outbreak in West has affected people in Sierra Leone, Nigeria, Guinea and Liberia. The countries, with the expection of Nigeria, account for a small proportion of global cocoa production. Côte d’Ivoire and Ghana have been unaffected and Côte d’Ivoire has even closed land borders to prevent spread of the disease. “The only concern at this stage would be the marketing of the cocoa,” said Laurent Pipitone, director of the ICCO’s economic division. Barry Callebaut recently cancelled a managers' meeting in Côte D'Ivoire over fear of the virus. Pipitone said that people’s reluctance to record information in remote areas in West Africa could affect cocoa projections, but there was no reason to be alarmist.
Pipitone said the ICCO stood by earlier forecast that there would be a 100,000 MT deficit in 2020. This is far lower than industry predictions of a 1m MT shortfall. However, those projections assumed the supply situation would remain unchanged.
“There were some scary projections that we don’t agree with,” said Pipitone.
Grinding at origin
The ICCO forecast that cocoa grindings for 2013/14 would be 67,000 MT higher than its previous estimate. The revision was due to higher than expected grindings at origin in Côte d’Ivoire, Indonesia, and Nigeria and also increased cocoa processing in India.