The International Cocoa Organisation (ICCO) monthly review of the cocoa market suggests that a decline of the monthly average ICCO daily price in April compared to the previous month could be misleading as far as futures markets are concerned.
In April the daily price averaged US$2,628 per tonne, down by US$42 compared to the average price record in March, and ranged between US$2,375 and US$2,810.
After a downward correction recorded in both LIFFE (London futures market) and ICE (New York futures market) from mid-March prices bounced back in April, both markets recovering 90 per cent of losses experienced in the previous month.
Yesterday, May 14, at time of close in London the ICCO daily price was US$2,674 per tonne, up from $2,657 the day before.
The monthly review said that data on volumes of cocoa reaching ports in West Africa confirmed expectation of a strong increase in cocoa production during the first half of the season.
According to data published by news agencies, the 2007/08 main crop in Côte d'Ivoire (ending in March) was up about 100,000 tonnes compared to the same period a year earlier.
Also Cocobod reported that 552,000 tonnes of cocoa beans were purchased from Ghanaian farmers in the first six months of the season, up 8 per cent.
However, with the main crops in West Africa and the mid crop in Indonesia over, the volume of cocoa available on spot markets was "rather small" in April.
Bloomberg reports that cocoa rose in New York yesterday on speculation that demand for chocolate will grow as the industry's promotion of its health benefits become widely publicised and middle class consumers in China and India buy more chocolate.
A trader at Hencorp Futures is quoted as saying that demand for cocoa will outstrip supply this year and production has been threatened by unrest in the Ivory Coast.
Drawing on the ICCO's quarterly bulletin of cocoa statistics published in February 2008, Bloomberg reports that the production of beans will be 51,000 tonnes less than demand for the season ending September 30.
Chocolate and Asia
There is a growing trend for confectionery companies to move into the Asia Pacific region, to take advantage of a growing taste for chocolate and increased consumer spending potential in the area.
Barry Callebaut inaugurated a manufacturing plant near Shanghai, China in January this year. A day later the company announced the completion of a deal to acquire production facilities from Japanese company Morinaga.
According to Global Business Insights, the Asia Pacific region is one of the most promising regions for confectionery companies.
Although Asian consumers account for only 17 per cent of global cocoa consumption, chocolate consumption in the region is currently increasingly at a rate of 25 per cent a year, the market analysts said.