Global Cocoa Deficit Triples as Second Year of Shortages Loom
Category: Cocoa
(Bloomberg) – The global cocoa market may be headed for a second year of supply deficit after last season’s shortage tripled from an earlier estimate, amid a dimming production outlook, the International Cocoa Organization said.
In the year ended Sept. 30, demand outstripped production by 160,000 metric tons, compared with an earlier estimate of 52,000 tons. Consumption of cocoa butter, used in making chocolates, surged while harvests of beans declined, the London-based organization of producing and consuming countries, said in a report e-mailed today.
“There is growing concern for the return of yet another supply deficit, with dry weather in West Africa negatively affecting the end of the main-crop production in the region,”the organization said, referring to the 12 months that began Oct. 1. “Wet weather patterns are being seen as crop damaging in Indonesia, the third-biggest producer.”
Cocoa futures jumped 26 percent in New York this year, as dry weather parched crops in Ivory Coast and Ghana, which together account for 58 percent of world harvests. Rising prices are boosting costs for European chocolate makers, including Barry Callebaut, Lindt & Spruengli AG and Thorntons Plc, Deborah Aitken, an analyst at Bloomberg Industries, said in a report on Nov. 19.
Grindings, a measure of demand, rose 2.4 percent to a record 4.052 million tons in the year that ended Sept. 30, driven by a surge in use of cocoa butter in Europe and North America, the biggest consumers, the group said. Production slipped 3.7 percent to 3.93 million tons.
Production in Ivory Coast, the biggest grower, fell 3 percent to 1.445 million tons, the organization known as ICCO said. The outlook for the country’s next crop “is rather subdued,” because trees are already aging, yielding less beans, and there is low level of investment and infrastructure in the country.
In Indonesia, bad weather conditions exacerbated the spread of crop diseases, while in Nigeria a lack of sunshine needed to dry the beans is raising concerns about the crop, the ICCO said.
