May 30 (Bloomberg) -- The global cocoa shortage for the 2011-12 season started in October will be 39 percent smaller than initially estimated, according to the London-based International Cocoa Organization.
Cocoa demand will outpace supplies by 43,000 metric tons from a February forecast of 71,000 tons, the ICCO said in a report e-mailed today. This season’s shortage follows a surplus of 343,000 tons in 2010-11, according to the group.
“Although a recurrence of the ideal weather conditions experienced in Africa is not envisaged, the start of the rainy season would help to boost crop development after the dry weather conditions which prevailed from December through January,” the ICCO said in the report.
Global production will reach 3.99 million tons, up from a previous forecast of 3.96 million tons, and down from last year’s 4.31 million tons, the ICCO estimated. Bean processing will be 3.99 million tons, little changed from the previous estimate and up from 3.92 million tons last season.
“After growing by over five per cent in the previous season, world grindings of cocoa beans are still projected to rise during the 2011-2012 crop year, but at a much slower pace,” the organization said. “Ivory Coast and Indonesia are expected to be the main contributors to the higher than previously expected estimate for grindings.”
Ghana, Ivory Coast
Cocoa output in Ivory Coast will be 1.41 million tons this season, up from a previous forecast of 1.35 million and down from last year’s record of 1.51 million tons, the ICCO said. Output for the mid-crop, the smaller of two annual harvests that usually starts in April, will reach 370,000 tons.
“The latest information on crop development and trade figures indicate that Ivory Coast’s output will be higher than previously expected, mainly due to the revision of cumulative cocoa arrivals to ports as at the end of February,” it said.
Rains in growing regions “bode well” for the mid-crop, according to the report. Dry weather earlier this year delayed the start of the mid crop harvest, the ICCO said.
Farmers in Ghana, the second-biggest grower, will harvest 890,000 tons, 8.2 percent less than previously forecast, the organization said, adding that there is still uncertainty over output for the light crop, which usually starts in June.
“Ghana’s cocoa regulator, Cocobod, was investigating a difference of around 70,000 tons of beans between purchases declared by licensed buying companies and its own inventory,” the ICCO said. “The season is still on and the gap will probably close before it ends.”
Production in Nigeria will be 10,000 tons higher than initially estimated at 220,000 tons, while Cameroon’s output will also be 10,000 tons higher than anticipated at 210,000 tons, according to the report.
Brazil, Latin America’s biggest grower, will produce 190,000 tons, up from a previous forecast of 180,000 tons, while output in Ecuador will be 175,000 tons, 17 percent higher than initially estimated. Farmers in Indonesia, the world’s third-largest producer, will harvest 500,000 tons, unchanged from the previous estimate, the ICCO said.
Cocoa bean processing will rise by 11 percent in Africa to 732,000 tons from a year earlier, the organization forecasts. Grindings will decline by 15,000 tons in Europe and 8,000 in the Americas because of low processing margins and concerns economic growth will slow, according to the report.
“Demand for cocoa powder is likely to remain strong in the Asian markets,” the ICCO said. “Although chocolate is still regarded as an ‘affordable luxury’, even in the face of economic hardship, demand for its key ingredient, cocoa butter, is rather low as the industry’s attention is focused on the euro zone crisis and its impact on consumption.”
Cocoa butter can account for as much as 20 percent of a chocolate bar, while cocoa powder is found in products such as soft drinks, cookies and ice-cream.
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