MILAN – A third consecutive year of deficit in the global cocoa market will send prices skyrocketing in 2014, according to a Rabobank analysis. Rabobank has revised upwards by more than 100,000 MT to 207,000 MT the estimated deficit in the world cocoa market for the current crop year and predicted an even larger gap for the 2014/15 season. In May this year it had projected a 75,000 MT shortfall.
It also gave its first forecast for the 2014/15 season and said that it expected a third consecutive deficit.
That shortfall is forecast to be 14% greater than the 2013/14 deficit forecast.
This will lead to a price surge of around 12% compared to current levels.
Adverse weather conditions in the Ivory Coast – the world’s largest cocoa producer – remain the key factor in supply/demand balance.
According to Tracey Allen, a commodities analyst at Rabobank cocoa production growth remains constrained, while the demand for cocoa products is picking up in Asia and particularly China.”
Global cocoa production is expected to remain relatively flat in the next two seasons, while cocoa grindings (demand) are set to rise, adding to the price pressure.
Agricultural commodities probably will extend declines in 2014 as world supplies remain ample, Rabobank International said in its annual outlook report.
The world is entering a period of “more balanced” supply and demand fundamentals after a decade of increasing volatility that drove prices for many farm goods to records, Rabobank analysts led by Luke Chandler in Sydney, said in the e report. Increased planting of grains and oilseeds and a potential slowdown in crop use for biofuels mean prices for corn and soybeans will trend lower next year, he wrote.
“Global inventory levels have been rebuilding throughout 2013, and the rapid demand growth of recent seasons has slowed,” Chandler wrote. “We expect prices to continue to ease for most markets in the grain and oilseeds complex in 2014.”
Source: confectionerynews.com, Bloomberg
