The International Cocoa Organization (ICCO) has estimated a cocoa surplus for the current crop year, but said the market would return to a small deficit next year.
Speaking at the World Cocoa Conference 2014 in Amsterdam, Laurent Pipitone, director of economics and statistics division at the ICCO, said that the ICCO expected a 30,000 metric ton (MT) supply surplus for the current season 2013/14, but a deficit slightly less than 100,000 MT for the next crop year.
“It’s nothing to be really afraid of,” he said.
Pipitone said that weather conditions in West Africa had been favourable this year. “But there’s signs that the weather will not be as conducive as last year," he said.
He said that production would be slightly lower for 2014/15 as cocoa consumption would continue to rise.
During a panel discussion at the conference featuring a trader from Amajaro and a Euromonitor analyst, it was almost universally agreed that there would be a slight deficit over the next four years, but panellists said forecasts of a 1m MT deficit by 2020 were overstated.
Jonathan Parkman, joint head of agriculture at Marex Financial, said that producing countries usually took around two years to respond to rising or falling cocoa prices and could react in time to prevent a deficit for the 2015/16 season.
“If we have any more increase in prices then I think we will see structural surplus for 2015/16," he said.
Diseases and replanting
But Amajaro Research’s head of cocoa research, Laurent Souron, warned about the increase of swollen shoot virus in Cote D’Ivoire, the world's top producing nation. He said that 53% of farms in the country had at least one tree infected in 2012, but this had risen to 70% this year.
There is no cure for this disease and the only solution currently is to remove and replace the tree.
However, Souron added that there had been a surge in replanting cocoa trees in Cote D’Ivoire, which has meant the number of trees under five years old has risen from 18% in 2010 to 30% in 2014.