The International Cocoa Organization (ICCO) has said that chocolate manufacturers needn’t panic by its forecasted deficit for the 2012/13 crop season.
Last week, the ICCO forecast that global cocoa production for the crop year (Oct 12-Sept 13) would reach 4,003m metric tons (MT), while demand would be 4,008m MT, leaving a 45,000 MT deficit.
Laurent Pipitone, director of the ICCO’s economic division, told ConfectioneryNews.com that this represented “a small deficit”.
“I wouldn’t say it’s a concern…There are sufficient stocks in the market,” he said.
According to the ICCO, there was a surplus last year of 86,000 MT, which Pipitone said made up the deficit for the current year.
He said that adverse weather conditions had led the ICCO to forecast a 1.8% fall in global cocoa production for the current crop year, while increased demand for chocolate had prompted the organization to predict a 1% rise in cocoa grindings.
In the 2009/10 season there were big concerns about cocoa supplies for the years ahead, but then the economic crisis hit, said Pipitone.
“The market is not as concerned as it was 2 or 3 years ago,” he said.
He said there were still worries among analysts, but not nearly as strong as they were 3 years ago.
According to the economist, the long term average demand for cocoa before the economic recession was growing around 4% per year and has now slowed to 2%.
Asia demand creates no risk in next five years
However, he warned that demand for chocolate was growing in Asia from the likes of China as chocolate manufacturers look to reach coastal cities in the market, he said.
According to Pipitone, rising demand in Asia was more a long-term impact and would not upset the cocoa supply and demand balance much in the next five years because of the aftermath of the global economic crisis.
Chocolate giant Mars previously predicted that demand for cocoa would outstrip supply by 1m MT by 2020.
Impact on prices
Pipitone said that if there was a large deficit prices would rise, but if supply stayed above demand, however close the balance became, prices would remain around the same.
The current price for cocoa on the London Futures market is £1421.33 per MT and $2094.33 per MT on the New York Futures market.
According to the ICCO, the monthly average cocoa price has been falling consistently every month since September last year.