A commodities broker, Marex Group, predicts that a recovery in cocoa production among the world’s largest growers will bring an end to the massive bean shortage that drove prices to record highs this year.
The upcoming 2024-25 season, starting in October, is anticipated to see cocoa output surpass supplies by 303,000 metric tons, marking the first surplus year after three consecutive seasons of deficits, according to Marex.
Over the past year, cocoa futures in New York have more than doubled due to severe supply shortages depleting global stockpiles.
This surge has attracted attention from Pierre Andurand, a renowned energy trader who shifted his focus to cocoa while maintaining a bullish outlook.
Andurand Capital Management forecasts that cocoa stockpiles on both New York and London futures exchanges will be depleted by year-end, projecting a production deficit of 650,000 to 700,000 tons for this season.
This estimate surpasses the International Cocoa Organization’s forecast of a 439,000-ton shortage, influenced by adverse weather and disease affecting crops in Ivory Coast and Ghana. Marex estimates this season’s deficit at 475,000 tons.
Looking ahead to the next season, Marex anticipates a rebound in output driven by improved weather conditions in West Africa, the world’s primary cocoa-growing region.
“The development of new the crop is looking strong,” said Jonathan Parkman, head of agricultural sales at Marex.
Improved rainfall patterns in West Africa have already contributed to a decline in cocoa prices from their record highs earlier this year. Futures in New York have retreated by over 30% from their peak in April, yet prices remain up nearly 85% in 2024.
Marex anticipates weak cocoa demand going forward. Despite an anticipated recovery in bean supply next season, the cocoa grindings, which denote the amount of beans processed by the industry, are expected to grow only moderately after a downturn this year.
“The main effect of extreme higher cocoa prices will manifest in lower demand over the next six months,” Parkman said.