It added that uncertainty over cocoa availability has led to recent price instability.
ICCO gave its first forecasts for 2012 in its Quarterly Bulletin of Cocoa Statistics.
Fall in world stocks
It forecast a production deficit of around 71,000 tonnes with world cocoa bean production down 8% by 343,000 tonnes.
On the other hand, grinds are expected to rise 2% to 3.9m tonnes.
The ICCO said in its latest Cocoa Market Review for February: “The relatively high level of uncertainty in regard to the availability of cocoa beans has led to an increased level of price volatility since December 2011.”
If ICCO’s forecasts are realised, it would lead to a 4% reduction in end of season stocks compared to 2010/11.
Other estimates
In December, Rabobank painted a very different image for the 2011/12 cocoa season.
In its ‘Outlook 2012—Down, But Not Out’ report it said that a larger than expected supply of cocoa beans from West Africa would add to high buffer stocks and push cocoa prices down by 4%,
Itforecast that cocoa prices would fall from $2,400 per tonne in quarter four (Q4) 2011 to $2,300 in the same quarter in 2012, a drop of 4%.
The current price at the close of play yesterday was $2420, according to the ICCO daily price.
Francisco Redruello, senior foods analyst at Euromonitor International, said earlier this week:“End of season stocks for the previous season were around 500,000 tonnes higher and it’s going to take some time to be absorbed by the market.”
“We think we are not likely to see any steady increase in prices for cocoa until the third quarter of the year once a significant part of the cocoa stocks has been absorbed by international cocoa grind."