Dry West Africa weather may hit cocoa supplies

The International Cocoa Organisation (ICCO) sees tight West African mid-crop supplies in 2006-07, but says prices should not go much higher in the coming months based on the supply and demand outlook. The ICCO on May 31 raised its forecast of a global cocoa deficit to 145,000 tonnes in 2006-07, compared with a surplus of 192,000 tonnes in 2005-06. In March it predicted a 103,000-tonne deficit. The ICCO’s senior statistician, Laurent Pipitone, said the London-based body had slightly reduced its output forecasts for leading producers Ivory Coast, Ghana and Indonesia, and had revised global consumption slightly up.

Pipitone forecast the 2006-07 cocoa mid-crop in top producer Ivory Coast at slightly more than 300,000 tonnes, against 440,000 tonnes the previous year. The Ivorian mid-crop runs from April to September. “We believe the Ivorian output will be lower than the average over the last four years for the mid-crop,” he said.

Pipitone expected the light crop in Ghana, the number two producer, to stand at some 80,000-100,000 tonnes, compared with almost 100,000 tonnes in 2005-06. He also predicted a lower than average mid-crop in Nigeria. “The production prospects there are not very good,” he said.

Dry weather from late 2006 until the first few months of 2007 had harmed development of cocoa crops in West Africa. But recent rains had improved the outlook for a good tail in production of West African mid-crops, Pipitone said. "There is not any reason for cocoa prices to go much higher in the coming months,” he said.

London cocoa futures are currently trading below recent near-four-year highs, driven up by worries over tight global supplies and robust demand. Liffe benchmark September cocoa futures were up £14 or 1.4 per cent at £1,047 per tonne in moderate volume of 2,434 lots.

Pipitone said the cocoa market had foreseen a 2006-07 global deficit for many months. “There is no expectation of a large deficit in 2007-08,” he added.

India Times