The International Cocoa Organization flagged signs of Asia realising long-held ambitions for cocoa consumption, and noted cause for caution over Cote d’Ivoire output too, as it expanded on reasons behind its latest supply forecast.
The ICCO on late on Thursday trimmed by 11,000 tonnes, to 371,000 tonnes, its forecast for the world cocoa production surplus over 2016-17, which ends this month.
The revision reflected in part an upgrade of 8,000 tonnes to a record 4.70m tonnes in the estimate for production, with increased expectations for output on top grower Cote d’Ivoire more than offsetting downgrades to crops in Brazil and Indonesia.
However, it also reflected improved expectations for grindings, lifted by 19,000 tonnes to 4.28m tonnes, raising the growth rate in processing volumes to 3.7% year on year.
That represents a sharp acceleration on growth of less than 1% last season.
‘Demand recovery optimism’
“World grindings of cocoa beans, an indicator of demand, are projected to fare better this current season,” the ICCO said, highlighting the boost from weak prices, which in June hit a 10-year low of $1,769 a tonne for a spot contract on New York’s futures market.
“Major chocolate manufacturers have generally reported improved sales volumes and the low international cocoa bean prices is anticipated to encourage cocoa processing activities.”
Indeed, the organisation flagged “optimism in the progressive global cocoa demand recovery,” to which strong positive growth” in demand for beans in Asia and Oceania was a key support.
Asia and Oceania-based processors were now seen leading the rise in grindings this season, expanding volumes by 88,000 tonnes, or 10%, this season, helped by increased capacity.
The ICCO lifted its forecast for Indonesian grindings by 20,000 tonnes to 420,000 tonnes, while raising the estimate for Malaysian volumes by 5,000 tonnes to 220,000 tonnes.
The upgrades follow strong quarterly data from the Cocoa Association of Asia on Asian grindings, statistics the ICCO said “support reports that demand for cocoa beans has been growing in the new emerging markets, particularly in Asia”.
The organisation also cited trade data for Indonesia, which “continues to import significantly more cocoa beans to meet demand”, against a backdrop of falling domestic output, sapped by weather setbacks.
Asian demand expansion would support long-held ideas among many commentators that global cocoa demand could yet face a step change, should the region’s per capita consumption levels rise anywhere close to those in the West.
However, concerns still remain over prospects for China for now, with the country’s imports of chocolate products for the first seven months flat at a little under 20,000 tonnes, and those of cocoa beans down 14.1% at 20,854 tonnes, according to customs data.
Cote d’Ivoire production
On the production side, the ICCO also noted concern over the cloud placed over Cote d’Ivoire suppose by excessive rains.
While the country’s output this season was now pegged at 2.01m tonnes – a rise of some 420,000 tonnes year on year, and equivalent to 43% of world output – “the heavier-than-usual rainy season in the world’s top cocoa producer is reported to have affected the… quality of the mid-crop”.
For 20167-18, “with much moisture left in the soil… reports indicate that more sunshine is needed for the development of the main crop”, of which harvesting begins next month.
The comments follow mixed market talk on Cote d’Ivoire weather, with some commentators seeing a boost to yield prospects from adequate moisture, and others highlighting the setback of extensive cloud cover.
(Source – http://www.agrimoney.com/news/asia-growth-spurs-optimism-in-cocoa-demand-revival—icco–10987.html)