Cocoa prices expected to climb

By Peter Stiff

- Last updated on GMT

Related tags Cocoa Cocoa bean

Cocoa prices will continue to climb next year as a steady growth in
consumer demand is met with somewhat erratic production levels.

As it has been for the past few years, the political situation in the Ivory Coast is thought to be the main concern of the industry, whilst issues involving Asia and organic cocoa are not expected to make a significant impact. spoke to soft commodity expert Judy Ganes of J.Ganes Consulting and Laurent Pipitone head of statistics at the International Cocoa Organisation (ICCO).

The markets reliance on cocoa from Africa is no secret, nor are the producer countries internal problems that threaten supply.

"Cocoa price could well hinge on the political situation in the Ivory Coast, for the past three years shipments have been threatened, yet been ok - any problem could potentially impact on prices,"​ said Ganes.

Ganes also commented on the problems caused by farmers receiving low prices for their crop "producers aren't re-investing and input costs are increasing, which isn't conducive to increasing production."

This is a view shared by Pipitone at the ICCO who revealed there was a small deficit for the last cocoa year, ending in September, caused by higher consumption than production.

Many confectioners may be concerned with the growth in the Asian chocolate market and the impact this could have on cocoa prices. However, despite the pressures placed on the 70 per cent of the world's cocoa grown in Africa, the 15 per cent contributed by Asia is enough to meet the local demand.

Pipitone said, "Although we expect consumption to grow in Asia it will be slow and local production is increasing."

It's important to note that Asian consumption is starting from a very small base, for instance consumption in Japan is 1.2 kilograms per head, far behind Germany's 3.5 kilograms.

With Indonesia now the world's third biggest producer of the commodity and Malaysian production on the rise, cocoa interests in the east may be note worthy but won't impact on price for some time.

Another area where impressive figures relating to rising demand should be put into context is organic chocolate.

Despite organic cocoa bean production making up less than one per cent of total cocoa production, the niche trend is one of the key growth areas in the chocolate industry.

"There is growth, but it is coming from a small base. Percentage increases may sound huge but in reality still form a small segment of the market,"​ said Ganes.

"There should be no problems with organic production, it's costly and takes three years to cultivate, but should be seen as an investment by growers,"​ said Pipitone.

Currently the biggest producer of organic cocoa beans is the Dominican Republic and to make sure prices are kept stable in to the future more confectioners and producers must expand their organic programs.

With overall cocoa consumption set to increase through the new cocoa year a more responsible attitude towards sustainable production should be established in order to maintain a stable price.

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