The global cocoa shortage is worse than previously thought
The International Cocoa Organization has admitted that the global cocoa shortage will be much more severe than previously expected. Cocoa prices in New York have rebounded in recent weeks, surpassing the $9,330 per ton mark to close the week.
According to initial news reported by Bloomberg, ICCO forecast that demand will exceed production by 439,000 tonnes, largely due to increased cocoa grinding in consuming countries. This is the second estimate for the current year from October to September and is much larger than the February forecast which called for a deficit of 374,000 tonnes.
“Currently available data reveal that cocoa milling activities have so far been unrelenting in importing countries, despite the record rally in cocoa prices,” ICCO said, adding: “ As the 2023-24 season progresses, it is certain that the season will end with a greater deficit than previously expected."
After the rush of "big cocoa" in New York in the first 3 and a half months of the year, in the first half of April, from 4,000 dollars a ton to over 12,000 dollars (a record), prices collapsed in May, with a drop of 44%. But over the past nine trading sessions, prices have risen to $9,330, or about 39%.
ICCO raised its estimate for global cocoa milling to 4.86 million tonnes, up from its initial forecast of 4.78 million tonnes, and raised its production projection by 12,000 tonnes to 4.46 million of tons.
The forecast revision likely caught the attention of Pierre Andurand of Andurand Capital Management, who has been betting on cocoa prices this year.
Earlier this month, Andurand joined Bloomberg Odd Lots hosts Tracy Alloway and Joe Weisenthal to discuss the cocoa trade.
Weisenthal asked the hedge fund manager:
What did your analyst see? Or how did your analyst see something in the supply and demand situation that he says, and you think, hasn't been identified by the analysts who cover this industry closely?
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This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/la-carenza-mondiale-di-cacao-e-peggio-di-quanto-si-pensasse/ on Mon, 03 Jun 2024 11:00:25 +0000.