Marex Group stated that the rebound in global cocoa production, the largest cocoa-producing country, will end the serious shortage of cocoa beans this year; West Africa is the region with the highest cocoa production in the world. The humid weather in the region has pushed cocoa prices back from their historical highs earlier this year.
Marex Group, a well-known commodity broker, stated on July 3, according to Cailian Press, that the rebound in domestic cocoa planting in the world's largest cocoa-producing countries will end the severe shortage of cocoa beans this year. The shortage of cocoa beans has led to record-high prices.
Marex expects that cocoa production will 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 shortage.
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, known as the “god of oil trading”, predicts that the inventory of the New York and London futures exchanges will be exhausted by the end of this year and expects a shortage of 650,000 to 700,000 tons of cocoa production this season.
This number is higher than the international cocoa organization's prediction of a shortage of 439,000 tons, due to the impact of adverse weather and disease on crops in Côte d'Ivoire and Ghana. Andurand had previously predicted that cocoa prices could break through $20,000 per ton.
Marex predicts a shortage of 475,000 tons this quarter. The broker also predicts that production will rebound next season due to improved weather conditions in West Africa, the region with the highest cocoa production in the world.
Jonathan Parkman, head of agricultural sales at Marex, said, "The development of new crops looks very strong."
Wet weather in West Africa has pushed cocoa prices back from earlier highs this year. New York futures have fallen more than 30% from their peak in April. However, cocoa prices have still risen by nearly 85% since the beginning of 2024.
On the other hand, Marex predicts that cocoa demand is also expected to be weak. After an expected decline in cocoa bean grinding this year, even if cocoa bean supply improves next season, the amount of cocoa beans processed by the industry should only increase moderately. "The main impact of extreme cocoa price increases will be a drop in demand over the next six months," said Parkman.
"The extremely high cocoa prices will mainly affect the decline in demand in the next six months," said Parkman.