La Nina threat to trim global cocoa output
Wednesday, 3 November 2010
AMSTERDAM, Nov 2 (Commodity Online): Global cocoa production is likely to repeat below par performances this year too, according to leading analysts, ABN Amro.
The Bank also cut to 28,000 tones, from 47,000 tones, its forecast for the world cocoa surplus in the 2010-11 year, citing the strength of the La Nina weather pattern, which has a history of denting production in Ecuador and Indonesia.
However, it acknowledged that even a surplus at this level was open to question, noting that it was making conservative assumptions for demand, and output forecasts for Ivory Coast, the world's top producer, well above official forecasts.
"The risk remains that there is a chance of slipping into deficit in the coming months," ABN Amro said.
"The background to the world's cocoa output thus remains insecure. The price risk to the supply-demand estimate for 2010-11 remains on the upside right now."
A deficit would extend to four the run of annual production shortfalls since 2006-07, with only 2008-09 producing a surplus, of a modest 35,000 tones.
One potential threat to hopes for a surplus this season was of more extensive La Nina damage in Ecuador than currently assumed, with the last occurrence of the weather event, in 2006-07, destroying 30 per cent of the country's crops.
In Indonesia too, La Nina, which is "only just getting into its stride", could bring a "difficult period".
The Bank also cut to 28,000 tones, from 47,000 tones, its forecast for the world cocoa surplus in the 2010-11 year, citing the strength of the La Nina weather pattern, which has a history of denting production in Ecuador and Indonesia.
However, it acknowledged that even a surplus at this level was open to question, noting that it was making conservative assumptions for demand, and output forecasts for Ivory Coast, the world's top producer, well above official forecasts.
"The risk remains that there is a chance of slipping into deficit in the coming months," ABN Amro said.
"The background to the world's cocoa output thus remains insecure. The price risk to the supply-demand estimate for 2010-11 remains on the upside right now."
A deficit would extend to four the run of annual production shortfalls since 2006-07, with only 2008-09 producing a surplus, of a modest 35,000 tones.
One potential threat to hopes for a surplus this season was of more extensive La Nina damage in Ecuador than currently assumed, with the last occurrence of the weather event, in 2006-07, destroying 30 per cent of the country's crops.
In Indonesia too, La Nina, which is "only just getting into its stride", could bring a "difficult period".