Commodity broker Marex Group said that the recovery of global cocoa production in the largest cocoa-producing country will end this year's severe shortage of cocoa beans.
According to Zhìtōng Cáijīng's report, commodity broker Marex Group said the recovery of global cocoa production in the largest cocoa-producing country will end this year's severe shortage of cocoa beans. The shortage of cocoa beans has caused the price of cocoa beans to soar to a record high. Marex expects cocoa production to exceed supply by 303,000 tons in the 2024-25 season starting in October. This will mark the first surplus this year after three consecutive quarters of deficits.
In the past 12 months, due to supply shortages leading to a significant reduction in global inventories, cocoa futures prices in New York have more than doubled. This wave of gains has even attracted famous energy trader Pierre Andurand, who recently quit the oil market while remaining bullish on the prospects of cocoa.
Andurand Capital Management expects that inventories at the New York and London futures exchanges will be exhausted by the end of this year, and predicts a deficit of 650,000 to 700,000 tons of cocoa production this season. This number is higher than the International Cocoa Organization's forecast for a shortfall of 439,000 tons, as crops in Côte d'Ivoire and Ghana are affected by adverse weather and disease. Marex expects a deficit of 475,000 tons this quarter.
Marex predicts that production will rebound in the next quarter due to improved weather conditions in West Africa, which is the highest producing region in the world. Marex's agricultural sales director, Jonathan Parkman, said, "The development of new crops looks strong."
Wet weather in West Africa has already pushed cocoa prices off their highs earlier this year. New York futures have fallen over 30% from their peak in April. Cocoa prices are expected to rise by nearly 85% in 2024 so far.
Marex predicts that cocoa demand is also expected to weaken. Even if cocoa bean supply improves in the next quarter, the amount of cocoa beans processed by the industry should only increase moderately after an expected decline in cocoa bean grinding this year. Parkman said, "The main impact of the extreme rise in cocoa prices will be evident in the decline in demand in the next six months."