Despite the recent record high prices for cocoa, the ICCO said this week that the potentially strong crop yields in West Africa for the 2007/08 season has helped ease this price pressure.

Many large manufacturers, including Cadbury and Kraft, have recently claimed that high input costs have caused affected margins in recent months.

However, July prices were still $136 per tonne (€100) above those of June, averaging $2,153 (€1,590) per tonne.

"The developments in the cocoa market occurring during the month of July were quite interesting," the ICCO said in the report. "After the record levels reached in recent months, market participants are now wondering if the cocoa markets have entered a new phase characterised by lower cocoa prices."

Bad weather patterns have already affected crops for the 2006/07 season, and the ICCO predicts a "significant production deficit".

This has already been putting price pressures on raw materials for the chocolate industry, however the ICCO now says the future may be more positive as manufacturers and processors are beginning to trust the market more.

"The level of forward fixed price coverage of cocoa processors and chocolate manufacturers, which was estimated to be relatively low in the preceding months, has improved, putting less pressure on the upward side," said the ICCO.

The outlook for West African crops in the coming season improved during July due to heavier rains, and so this could help encouraged the future stabilisation of prices, claimed the ICCO.

However, the report does note that there is "no clear evidence yet that the 2007/08 growing season will experience a production surplus".