After rising quickly in the second week of March 2018 cocoa has been trading at around US$2,450 per ton – its highest level since November 2016.
The International Cocoa Organization (ICCO) has raised the prospect of another surplus of 105,000 tons in 2017/18. This would further increase worldwide stocks, putting them back at roughly the same level they last were in 2011/12.
Commerzbank Research said the steep rise in the price nonetheless shows how sceptical the market is about this optimistic prediction.
According to the ICCO, production in Côte d’Ivoire for example – the largest producer – is set to total 2 million tons in 2017/18, thereby falling only 1 per cent short of the previous year’s record.
“Following good weather conditions in the season so far, unofficial data do indeed indicate roughly this minor shortfall,” Commerzbank said. “That said, the Ivorian Coffee and Cocoa Council had long been optimistic that the main crop from October to March would yield 1.53 million tons, yet only 1.38 million tons are actually likely to be produced. It already seems as if a number of contractually agreed shipments will not be fulfilled.
“Now the prospects are worsening for the mid-crop that will soon be getting underway, as there is a lack of rainfall in some parts of the country.”
According to the ICCO, Ghana is likely to produce 900,000 tons – 7.2 per cent less than last year. Some other observers do not believe that even 850,000 tons will be achieved. “It is therefore by no means certain that we will see a surplus at all given the dynamic demand,” Commerzbank said.