Cocoa prices were pegged at around $3,239 per MT in June, according to the International Cocoa Organization’s (ICCOs) monthly averages – the highest monthly price since post-election violence in Côte D’Ivoire in 2010-11.
Rabobank said in its July Agri Commodities report that political uncertainly in the lead up to general elections in the world’s premier cocoa producing nation Côte D’Ivoire would further increase volatility for the commodity.
Supply: Political uncertainty, but recovery expected
The bank has upped its price predictions for the next three quarters compared to last month’s estimates, but expects the cocoa market to pick up for next season (2015/16).
“…We project ICE futures will remain above USD 3,000/tonne until October. However, we expect prices to come down just after the elections,” it said.
Rabobank said strong cocoa pod counts in Côte D’Ivoire – which accounts for around 40% of world production - could lead to a good crop for the country. It expects the nation’s elections to be peaceful with the incumbent president Alassane Ouattara predicted to win.
“Meanwhile, incredible internal prices in Ghana – together with a surge in the use of fertilizers – should create conditions for a full recovery in 2015/16,” it said.
Q2 cocoa grind summary
On the demand side, Rabobank said reduced profit margins for cocoa processors had hampered demand for cocoa in the second quarter (Q2) of 2015.
Earlier this month, ConfectioneryNews reported a 8.6% drop in the Q2 North American cocoa grind and flat (+0.6%) year-on-year cocoa processing in Europe for the quarter. The International Cocoa Organization (ICCO) said at the time that cocoa processors were struggling to break even.
Q4 Cocoa Grind (MT)
Demand: Too hot for choc?
The Cocoa Association of Asia has since reported a 12% fall in cocoa grindings for the region, driven in part by China’s slowing economic growth.
Hershey for example recently issued a profit warning after its sales in China fell short of expectations.
Rabobank also suggested the weather around the world could be harming chocolate consumption.
“…The fact that 2015 looks like it could be the hottest year on record can only be ominous for cocoa consumption around the globe,” it said in its report.