Linked In
News In
Linked In

You are viewing 1 of your 2 complimentary articles.

Register now to receive full access.

Already registered?

Login | Join us now

Cocoa prices - will 2012 bring a third year of decline?

Twitter Linkedin

Cocoa prices ended 2011 more than 30% lower than they started the year, in both London and New York.

This marked the second successive year of decline, falls fostered by the La Nina weather pattern which for cocoa, unlike other farm commodities, is a fillip for output.

Ivory Coast and Ghana, the top two producing nations, tend to benefit from higher rainfall, even though precipitation often proves too much in La Nina periods for growers in third-ranked Indonesia.


"It is clear that concerns about a supply shortage were unfounded. In fact, a record harvest of 1.5m tonnes has recently been achieved in the Ivory Coast, as in neighbouring country Ghana of over 1m tonnes.

Commerzbank forecasts for New York cocoa price, 2012

Q1: $2,300 a tonne

Q2: $2,400 a tonne

Q3: $2,500 a tonne

Q4: $2,500 a tonne

Forecasts for average price, near-term contract, during the quarter

Year average: $2,450 a tonne, ($2,950 a tonne in 2011)

"After an estimated record 4.2m tonnes in 2010-11, more than 4.1m tonnes could still be produced worldwide in 2011-12.

"After the large supply surplus in 2010-11, at least a modest oversupply could be reported again, despite robust grinding figures which, however, will no longer rise quite as sharply as in 2011.

"The majority of speculative financial investors is still betting on falling prices. Net short positions even have been increased further recently. This could lead to a rise in prices if these investors cover their short positions.

"All in all, despite growing demand, the cocoa price is likely to have only limited upward scope given the large supply volumes. We therefore expect only a modest rise in cocoa prices in 2012."

Goldman Sachs

"The growing likelihood that global cocoa production exceeds demand for a second year in the 2011/12 season that started last month [November] is leading us to lower our three- to 12-month forecasts, which until last month were below cocoa prices, from $2,700 a tonne to $2,450 a tonne.


Late Q1: $2,700 a tonne

Late Q2: $2,700 a tonne

Late Q4: $2,700 a tonne

Forecasts for near-term contract

"The introduction of a guaranteed minimum price for farmers by the Ivory Coast government, equal to as much as 60% of international prices, could support investment in the sector."


"Abundant supply of cocoa beans and better expectations for the 2011-12 crop are expected to lead prices lower in 2012.

Rabobank forecasts for New York cocoa price 2012

Q1: $2,350 a tonne

Q2: $2,450 a tonne

Q3: $2,350 a tonne

Q4: $2,300 a tonne

Forecasts are for quarter average prices, forthe near-term contract

"However, the cocoa bean market is somewhat insulated from weakness in chocolate consumption due to the increasing demand for cocoa powder which is found in a variety of products, from chocolate drinks and ice cream to health supplements.

"We anticipate EU and US grindings falling from 2011 levels, but total global grindings to increase 3.7% in 2011-12, driven mostly by the powder market."

"The cocoa bean market could be impacted in 2012 by policy moves in Ivory Coast, as the new government may play a larger role in the procurement and trade of cocoa.

"The price of cocoa beans rose to a new norm in the past four years, as the market became concerned that underinvestment in capacity by the major producing regions was leading to a global deficit.

"It seems that price signals have worked. Price signals have increased output and, alongside supportive weather, this is a bearish outcome in a world eating only marginally more chocolate."

Standard Chartered

"We expect cocoa and coffee markets to remain relatively sluggish, in spite of tightening supply during the 2011-12 season.

Standard Chartered forecasts for New York cocoa price 2012

Q1: $2,350 a tonne

Q2: $2,500 a tonne

Q3: $2,450 a tonne

Q4: $2,400 a tonne

Forecasts for average prices during the quarter

Year average: $2,425 a tonne, (was $2,934 a tonne in 2011)

"Large West African supply is likely to cap prices in the near term."


Twitter Linkedin
Related Stories

Abares lifts hopes for sugar futures, but cuts its cotton price forecast

A downgrade to Australia curtails an upgrade in world sugar output expectations. But for cotton, Abares ditches ideas of a global production deficit

Evening markets: Ags poop party lifting other commodities, shares

Wheat futures set another contract low, while arabica coffee hits its weakest close but one in 19 months, despite buying in other asset classes

Australia cuts wheat export hopes, pegs canola shipments at 7-year low

The country’s Abares bureau sees a dent to wheat shipment prospects from a smaller harvest, but lifts expectations for coarse grain exports

Hedge funds turn net bullish on ags - ahead of price drop to historic low

Speculators are wrong-footed in soymeal, in which they hike bullish bets just before a price tumble. But they fare better in cotton and cocoa
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

Our Brands: Comtell | Feedinfo | FGInsight

© 2017 and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of the Briefing Media group
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069