Published By : 17 Dec 2013 | Published By : QYRESEARCH
The demand for confectionaries and cocoa products might be witnessing a surge in view of the festive season; but the good tidings might just end with the festivities. Rabobank, a Dutch financial services and analytics firm has forecast that 2014 will see the third consecutive deficit in cocoa production causing prices to spike.
The analysis states that the deficit will likely be more than 100,000 MT in the present crop year (2013- 14). It further states that the crop deficit is anticipated to be even higher than that in the 2014- 15 crop year. The deficit will be further aggravated by an estimated price rise of around 12% higher than the existing price levels.
According to a Rabobank analyst quoted on Confectionerynews.com, the growth in production levels of cocoa remains constrained where as the demand for cocoa products is witnessing an increase in Asia-especially in China.
Some of the reasons for a dip in the production volumes of cocoa are being attributed to unfavorable weather conditions in the Ivory Coast that is also the largest producer of cocoa globally and accounts for nearly 40 percent of the global cocoa output. This poses the greatest challenge for the cocoa industry at this point in time.
While Rabobank had estimated the at cocoa shortfall would amount to about 75,000 MT, it has increased these estimates to reach a higher deficit figure of around 207,000 MT in the 2013- 14 season, the report on Confectionerynews.com said.
Overall, industry estimates state that the production of cocoa is expected to maintain a flat level over the next two crop seasons. With the demand for ground cocoa surges in Asian countries, a price increase seems inevitable. In the third quarter of 2013, the prices of cocoa hovered around USD 2,447/MT and are expected to touch around $3,000/MT, showing a 23% rise.