(Bloomberg) — Global cocoa shortages are set to ease this season into a small surplus following three years of shortages, providing limited relief to strained stockpiles.
Supply will surpass demand by 142,000 tons in the 2024-25 year, the International Cocoa Organization said in its first estimate for the current season that runs through September. The surplus comes as higher prices have boosted production and harmed demand.
“High cocoa prices which have prevailed for the past several years have incentivized farmers to put in more efforts and resources in cocoa farming despite the challenges they face,” the ICCO said. “On the contrary, declines in demand are expected as high cost of raw materials for cocoa users seems to be causing reduced demand.”
The ICCO estimates production to rise 7.8% to 4.84 million tons in 2024-25. Grindings — a proxy for consumption — are seen falling 4.8%.
Still, the increase may not be enough to replenish low inventories after last year’s record deficit, and market players including Barry Callebaut AG, the world’s biggest cocoa processor, see potential for further tightness. Supply fell short of demand in the 2023-24 season by 441,000 tons, the ICCO said, revising its estimate slightly higher from a prior forecast of 478,000 tons.
Cocoa futures surged to a record of over $12,000 a ton in New York in December, driven by renewed supply fears in Ivory Coast and Ghana, where the majority of the crop is grown. However, prices have fallen about 16% this month as the prospects of even higher chocolate prices sour the demand picture.
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