Cote d'Ivoire cocoa prospects 'much more favourable' for 2016-17

02.09.2016

Prospects for Cote d'Ivoire output in 2016-17 "look much more favourable", the International Cocoa Organization said, even as it slashed the country's hopes for the current season, driving world deficit expectations higher.

A downgrade on Wednesday by the ICCO of 51,000 tonnes, to 3.99m tonnes, in its forecast for world cocoa production in 2015-16 was fuelled by reduced expectations for Cote d'Ivoire, details obtained by Agrimoney.com show.

The estimate for Cote d'Ivoire production, which accounts for some 40% of world output, was downgraded by 80,000 tonnes to 1.57m tonnes – a drop of 226,000 tonnes year on year.

"The major contributory factors to this relatively modest crop are the dry weather and severe harmattan conditions that have prevailed," the ICCO said, flagging some setback too from "caterpillars attacking cocoa farms".

The impact of the setbacks had been felt on quality, as well as quantity, with the organisation saying that "unfavourable weather conditions have led to higher free fatty acid levels and small sized beans which are being rejected by exporters.

While Cote d'Ivoire set a ceiling for beans of export grade of 120 beans per 100 grammes for the April-to-September period, when the mid crop is harvested, "reports from exporters indicate that the average bean counts were often higher, ranging between 125 and 160 beans per 100 grammes".

'Much more favourable'

The disappointing harvest has hurt the country's growing cocoa processing sector, as well as producers, prompting the ICCO to cut by 30,000 tonnes, to 510,000 tonnes, its forecast for the Cote d'Ivoire cocoa grind in 2015-16, which ends this month.

ICCO world cocoa forecasts, 2015-16, change on previous, and (year on year)

Production: 3.988m tonnes, -51m tonnes, (-248,000 tonnes)

Consumption (grindings): 4.160m tonnes, -19,000 tonnes, (+8,000 tonnes)

Carryout stocks: 1.376m tonnes, -54,000 tonnes, (-212,000 tonnes)

Stocks-to-grindings ratio: 33.1%, -1.2 points, (-5.1 points)
"The shortfall in the country's cocoa production as well as an increasingly poor bean quality in the second half of the season has taken a toll on the country's cocoa processing activities."

However, the ICCO flagged better prospects for Cote d'Ivoire output next season, despite "mixed" weather conditions of late in West Africa.

"While the lack of rainfall in some areas is posing challenges for the upcoming new season, the prospects look much more favourable than for the current 2015-16 season."

'Tight situation' - for now

The comments tally with those of Rabobank, which said that rainfall in West Africa, which overall produces more than 70% of world cocoa output, has "continued to be decent, if not as good as previously expected.

"We still think this supports ideas of very good crops in 2016-17, which should be arriving in Europe from December onwards," with the potential too for a boost to supplies as low-specification beans withheld from the latest harvests are blended with higher-grade new crop.

However, the bank acknowledged that for now "we have a tight physical situation".

The ICCO on Thursday raised by 32,000 tonnes, to 212,000 tonnes, its estimate of the world cocoa production deficit in 2015-16, and cut by 56,000 tonnes, to 1.38m tonnes, its forecast for end-of-season inventories.

'Long drought'

The ICCO also flagged cause for optimism over cocoa output in Ghana, the second-ranked producing country after Cote d'Ivoire, citing government support, through measures such as education as well as free seedlings.

However, it signalled cause for concern over prospects for Brazil, for which the 2015-16 production estimate was downgraded by 45,000 tonnes to 135,000 tonnes, representing a 41% slump year on year.

"Arrivals from the producing regions have been low, due to the long drought experienced earlier in the season.

"Although some areas are reported to be recovering from the drought, precipitation in other areas remains below normal levels."

Most Brazilian cocoa is grown in the north eastern state of Bahia, with some in Espirito Santo, states which have both suffered well publicised dryness.
    


agrimoney

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