Commodity broker VSA is "confident" that cocoa prices will surpass their 2014 high this year.
"The production shortfall in Ghana and the fact that the ongoing El Nino weather phenomenon appears to be strengthening only make us more confident in our prediction," said VSA, noting the "volatility of pricing and fragility of supply in the cocoa market".
On May 29 the ICCO revised its forecasts for global cocoa production down 64,000 tonnes to 4.168m tonnes, while revising expectations for grinding, a proxy for demand, down 43,000 tonnes to 4.164m tonnes, increasing forecast global cocoa deficit to 38,000 tonnes.
Noting the ICCO reduction in forecast grinding demand, VSA said "global chocolate consumption is showing signs of being affected by the current higher prices".
However, the group added that "given that grindings have a strong positive correlation with global GDP, the longer-term picture looks much more positive".
A main driver in the recent cocoa rally has been a reduction of crop prospects in Ghana, the world's second largest cocoa producer.
This month Cocobod, the Ghanaian cocoa regulator, revised its 2014-15 crop estimate down 100,000 tonnes to 750,000 tonnes from its mid-season estimates, compared to 897,000 tonnes in 2013-14.
But VSA said that with the main crop purchases only just over 600,000 tonnes, and the June to September "light crop" typically under 100,000 tonnes, "the Cocobod forecast may still be optimistic".
The International Cocoa Organisation has forecast Ghanaian production at 690,000 tonnes, compared with a forecast of 810,000 tonnes made in May.
VSA also noted that the falling Ghanaian currency left farmgate cocoa prices lower than in neighbouring Ivory Coast last season, leading to smuggling, which may mean that production has actually fallen
Regarding the low Ghanaian production, VSA said "a variety of reasons have been suggested for this years' downturn".
VSA cited "biological tree stress" cause by high production in recent years, low levels of rainfall, and a stronger than normal Harmattan, which is a dry Sahara wind that blows over West Africa in the winter months.
Ghana has also seen a shortfall in inputs, such as fertilizer, pesticides and fungicides, after the government subsidy system was reconfigured to deal with widespread misappropriation of subsidised products.
These short term issue could have eased by the next season. ICCO has already expressed confidence that Ghanaian production will rise in the 2015-16 season, thanks to great use of inputs such as fertilizer.
However, VSA also pointed to some more structural production issues, "such as the high average age of a typical cocoa farmer; the high average age of trees (c35 years); a switch to other, easier to manage crops; city migration; and competition for land with extractive industries such as gold mining".
VSA also maintained a buy rating on United Cacao, a London-listed Peruvian cocoa grower, which is currently in the process of planting 3,250 hectares of cocoa estates.
United Cacao, which has yet to produce revenue from its estates, made a net loss of $3m, but is on track to plant 2,000 hectares by the end of the year, which would make it the largest Latin American grower, in a market dominated by small farmers.
"This year has certainly highlighted the volatility of pricing and fragility of supply in the cocoa market," said VSA.
"We continue to believe that this points to an attractive long-term environment for United Cacao to develop its business into".
United Cacao stressed the yield benefits of Peruvian cocoa cultivation.
"It makes absolutely no sense for the cacao industry to be expanding in West Africa when the yields per hectare are 500 kg per annum when a hectare in Peru can yield in excess of 2,500 kg per annum," said United Cacao.
"The vast majority of cacao produced in the world, principally in West Africa, is done inefficiently, using decades old clonal materials in areas with insufficient rainfall and what we consider to be horrific labour practices."