West Africa's larger-than-expected supply of cocoa beans to bring cocoa prices down 4% year-over-year to US$2,300/tonnes in Q4 2012, Rabobank says

Andrew Rogers

LOS ANGELES , December 5, 2011 (Industry Intelligence) – According to a report published by financial services advisor Rabobank, entitled ‘Outlook 2012—Down, but Not Out,’ due to a larger than expected supply of cocoa beans from West Africa, the price of cocoa during the fourth quarter of 2012 will fall to US$2,300 per tonne, a 4% decrease year-over-year, Bakery and Snacks reported Dec. 5.

Rabobank’s report conflicts with Goldman Sachs Group Inc.’s estimation that the price of cocoa will rise by 12% to $2,700 per tonne during the next three months.

Although Rabobank predicts that the demand for chocolate confectionery will stagnate due to weak economic growth in 2012, a high demand of cocoa powder products should protect chocolate confections from price fluctuations.

Due to the demand for cocoa power products, Rabobank projects that the global grind will increase by 3.7% even as the expected grinds in the U.S. and the EU fall below their 2011 levels.

According to Rabobank’s report, the cocoa market could also be influenced by the new Ivory Coast government’s policy changes concerning the price of cocoa.

In addition to guaranteeing cocoa farmers a market price of between 50%-60% of the international terminal price for cocoa, the government is requiring exporters to pre-purchases beans before the beginning of the harvest.

An excerpt of Rabobank’s report reads as follows: “The uncertainty about the government’s plans is impacting the market, and since the country accounts for one-third of global output, unpredictable government interventions will inject volatility in to the international

The primary source of this article is Bakery and Snacks.com, Crawley, England, on Dec. 5, 2011.

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