Feb. 14 (Bloomberg) -- Cocoa prices, which fell the most in 12 years in 2011, may have ‘more upside,’ with demand outstripping supply this season, according to Singapore-based raw materials trader Olam International Ltd.
Cocoa fell 32 percent in London last year, the biggest annual drop since 1999, after global production was 341,000 metric tons higher than consumption in the 2010-11 season, data from the London-based International Cocoa Organization show. A deficit of 100,000 tons is forecast for the 2011-12 crop year that started in October, Gerry Manley, managing director and global head for cocoa at Olam, said on Dec. 12.
“Where we’ve had a surplus in the last marketing year, 2010-2011, we expect a deficit in 2011-2012,” Sunny Verghese, the company’s chief executive officer, said on a conference call about the company’s earnings today. “There’ll be a little bit more upside to cocoa prices going forward.”
Cocoa prices have climbed 6.9 percent on the NYSE Liffe exchange in London this year on speculation dry weather in West Africa will damage the mid-crop, the smaller of two annual harvests that usually starts in April. Ivory Coast and Ghana, the two biggest growers, accounted for 58 percent of global production in 2010-11, according to ICCO data.
The mid-crop in Ivory Coast, the world’s biggest producer, may fall to 310,000 tons in 2011-12 from 448,000 tons in the previous season, London-based broker Marex Spectron estimated on Feb. 3.
Cocoa processing grew by about 5 percent in 2011, “slightly higher than what people have factored in,” Verghese said on the call. Grindings, an indication of demand, have been “very strong, stronger than expected.”
--Editors: Sharon Lindores, Nicholas Larkin
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