The global cocoa supply balance is seen shifting from a surplus of 250,000 tonnes in 2020/21 to a deficit of 125,000 tonnes in 2021/22, due mainly to an expected smaller production in Ghana, according to a Reuters poll with eight analysts and brokers.
The median forecast for cocoa production in Ghana, the world's second largest grower after Ivory Coast, is for 775,000 tonnes in the new season that starts in October, versus 1.05 million tonnes in the previous crop due to unfavourable weather conditions as rains arrived late, and then were too heavy.
Ivory Coast's crop is also seen smaller, but by not much. The poll indicates production falling to 2.2 million tonnes in 2021/22 from 2.23 million tonnes.
The outlook for a deficit due to smaller production, coupled with a prospect for better demand as social events pick up and travel restrictions ease post-pandemic, should boost prices.
Poll respondents expect New York cocoa futures to end 2021 at $2,750 per tonne, nearly 6% more than the closing price for the December position on Tuesday.
They see London cocoa futures ending the year at 1,880 pounds per tonne, almost 4% more than on Tuesday.
Impact On Prices
"The rate of consumption growth," said analyst Thomas Hartmann at TH Consultoria e Estudos de Mercado when asked about the main factors impacting prices towards the end of the year.
Other analysts also cited high ocean freight rates and the late start to the African crop as possible factors impacting the market from now to year-end.
Cocoa has been one of the few agricultural commodities not to see sharp price gains during the pandemic. Front stocking on fears of supply chain disruptions, weather problems and economic stimulus measures boosted buying on other commodities futures during the last year.