Rabobank upped its forecasted cocoa deficit by more than 100,000 MT for the current crop year and predicted an even larger shortfall for the 2014/15 season accompanied by a price surge of around 12% compared to current levels.
Tracey Allen, commodities analyst at Rabobank told ConfectioneryNews: “Production growth remains constrained, while we continue to see the demand for cocoa products picking up in Asia and particularly China.”
Adverse weather conditions in the Ivory Coast - the largest cocoa producer in the world at roughly 40% of output - remains the chief supply side challenge.
Rabobank upped its forecasted deficit for the 2013/14 season to 207,000 MT. In May this year it had projected a 75,000 MT shortfall.
The organization also gave its first forecast for the 2014/15 season and said that it expected a third consecutive deficit. That shortfall is projected to be 14% greater than the 2013/14 deficit forecast.
Global cocoa production is expected to remain relatively flat in the next two seasons, while cocoa grindings (demand) are set to rise, adding to the price pressure.
ICE cocoa prices stood at an average of $2,447 per metric ton (MT) in the third quarter of 2013. Rabobank said that it expected the prices would rise 23% to $3,000 per (MT) by Q3 2014.
The cocoa price hikes will be accompanied by rising sugar prices, the Dutch group said.