London: The global cocoa market is forecast to be closely balanced in 2010/11, with a surplus of some 70,000 tonnes, despite political tension in top producer Ivory Coast, the head of the International Cocoa Organization said.
“For the past five years we’ve experienced a deficit but now we are moving into a balance,” ICCO executive director Jean-Marc Anga said.
Anga told Reuters Insider television in an interview late on Wednesday that he expected global cocoa output to grow by 6-8% year-on-year to 3.8 million tonnes in 2010/11 and cocoa consumption to rise by 2.9% to 3.7 million tonnes.
He said he believed ample cocoa supplies from Ivory Coast were reaching the world market despite a standoff between two rival governments after a 28 Nov. election.
“Cocoa is still flowing out of the country despite the political stalemate,” he said, adding that he expected cocoa inventories to continue to rise.
“Based on the information that we have, fortunately so far the supply pipeline has not been affected by the situation in the country.”
Anga said he expected ICE cocoa futures to remain at around $2,900 per tonne and Liffe cocoa futures to remain at around £1,900 per tonne in the near term.
“We do not anticipate the cocoa price to be considerably affected by the situation in Ivory Coast because now that we realise that cocoa is still flowing out of the country despite the stalemate, the situation is likely to remain the same.”
ICE cocoa futures stood at $2,973 per tonne, down $7 or 0.2%, in early trading on Thursday, below a nine-month high of $3,140 per tonne touched on 7 Dec.
Cocoa futures rallied after the election due to uncertainties over supply from Ivory Coast.
Anga said weather had been favourable to cocoa production in Ivory Coast.
He forecast Ivorian total cocoa output to stand at around 1.3 million tonnes in 2010/11, up 50,000 tonnes year-on-year.
He predicted cocoa output in number 2 producer Ghana at some 800,000 tonnes, up 170,000 tonnes year-on-year.
Anga said that plans for long-term structural reforms of the Ivorian cocoa economy, characterised by ageing trees and a lack of investment, would be seriously complicated if the political stalemate dragged on.
“If this standoff were to continue in the months to come—and much worse degenerate into an armed conflict—then the situation would have serious consequences for the cocoa sector,” he said.