Supply was expected to fall behind demand by 71,000 metric tonnes (mt) for the cocoa year, but the ICCO now expects the shortage to be 39% less at 43,000 mt.
In its May 2012 Quarterly Bulletin of Cocoa Statistics issued last week, the ICCO said favourable weather and higher grinds than previously forecast in the Ivory Coast and other growing countries such as Nigeria and Brazil could help plug the deficit.
Output in the Ivory Coast, the largest cocoa growing country, is expected to be up almost 5% more than the ICCO’s previous forecast in its February bulletin, while Latin America’s biggest grower Brazil is forecast to see 10,000 more metric tonnes than earlier estimates.
However, the ICCO added that output from the world’s second largest grower, Nigeria, is forecast to be even lower than expected and increasing demand from Asian markets will mean a shortage remains.
Supply crisis
North American cocoa processor and chocolate ingredients supplier Blommer Chocolate Company recently warned of a “significant supply risk to the industry”.
It said that demand for cocoa is expected to climb 30% in the next 10 years creating a 25% shortage of current supply.
Last month, financial services group Rabobank, said that it also expected a deficit for current cocoa season of 33,000 mt lower than the ICCO estimates.
It added that the deficit would continue into the 2012/13 season, leading to an even larger shortage of 89,000 mt.
Impact on prices
Rabobank estimated that ICE cocoa futures would rise 13% to $2,600 per tonne between Q1 2012 and Q1 2013. It said London Liffe futures would climb 10% to £1,700 over the same period.
The group claimed that cocoa prices would rise due to increased demand from Asia and policy changes in the Ivory Coast.
The Ivory Coast Government plans to introduce a guaranteed minimum price scheme for cocoa farmers due to be implemented in October this year.
The planned reforms have led chocolate makers to stockpile on bean supplies, according to sources from news agency Reuters.