CocoaNetwork (New York) – The International Cocoa Organization (ICCO) notes that the revisions to the balance sheet for the 2021/22 season continue to reflect a supply surplus for the season. The global supply surplus, which was estimated at 215,000 tonnes in the previous issue, now stands at 194,000 tonnes for the 2020/21 season.
The estimate for global production has been revised to 5.244 million tonnes (up by 4,000 tonnes). The change results from an upward revision for Madagascar (up by 6,000 tonnes to 19,000 tonnes) and a downward revision for Peru (down by 2,000 to 156,000 tonnes). Global grindings are now estimated at 4.998 million tonnes (up by 25,000 tonnes). The major changes in demand estimates concerned the inclusion of Bulgaria at 21,000 tonnes. In addition, there has been an upward revision for Kazakhstan (up by 4,000 tonnes to 7,000 tonnes) as well as minor revisions for some countries totaling not more than 500 tonnes.
REVISION TO 2021/22 FORECASTS
World cocoa production for the current season is expected to be 4.890 million tonnes, lower by almost 33,000 tonnes than the 4.923 million tonnes previously projected three months ago. While Ghana is faced with a significant revision (down by 111,000 tonnes to 689,000 tonnes), upward changes of 10,000 tonnes each have been made for Cameroon, Nigeria, Brazil and Peru to 290,000 tonnes, 280,000 tonnes, 220,000 tonnes and 160,000 tonnes respectively. Production for Madagascar has also increased (by 9,000 tonnes to 20,000 tonnes). Minor revisions on production for several countries aggregating 29,000 tonnes have also been made. World grindings are anticipated to be much better than previously published and have been adjusted upwards to 5.071 million tonnes (up by 23,000 tonnes). This was mainly attributed to the inclusion of Bulgaria (21,000 tonnes). Higher grindings are anticipated for Côte d’Ivoire (up by 20,000 tonnes to 660,000 tonnes), for Indonesia (down by 20,000 tonnes to 470,000 tonnes) as well as minor revisions for some countries aggregating almost 2,000 tonnes have been made. The global production deficit is now forecast at 230,000 tonnes for the current season. The total statistical stocks of cocoa beans at the end of the 2021/22 season are projected at 1.683 million tonnes, which is equivalent to 33.2% of the annual grindings forecast.
PRODUCTION
Incoming arrivals and purchases data reflect expectations of a lower global production for the 2021/22 season. Inflation has taken a toll on the prices of farm inputs, resulting in a reduced usage of fertilizers and this, combined with less conducive weather conditions and diseases, has contributed to the downward trend observed in global cocoa production. At the regional level, production in Africa is expected to reach 3.655 million, down by 401,000 tonnes compared to the previous season. In the other regions, production is forecast to increase to 969,000 tonnes in the Americas (up by 34,000 tonnes) and to 266,000 tonnes in Asia and Oceania (up by 13,000 tonnes). In terms of its share of total production, Africa remains by far the largest cocoa producing region, accounting for 75% of world cocoa output, followed by the Americas (20%) and Asia and Oceania (5%).
AFRICA
CÔTE D’IVOIRE
In Côte d’Ivoire although compared to the past season, production is expected to decrease to 2.2 million tonnes, historically the levels can still be regarded as high. Fundamental factors, mainly relating to less suitable weather conditions, have negatively affected production and led to the decline in the country’s production.
GHANA
The drastic decline in Ghana’s cocoa production is the key driver of the current season’s global supply shortfall. Compared to the past season, from 1.047 million tonnes in 2020/21, production in the country is forecast to fall as low as almost 689,000 tonnes for the ongoing season. The reduction in fertilizers offered to farmers coupled with disease outbreaks and less conducive weather conditions have been detrimental to the cocoa farms in the country.
CAMEROON
In Cameroon, year-on-year cocoa beans exports data for the first half of the season are virtually at the same level. As such, the country’s production for the season under review is forecast at 290,000 tonnes.
NIGERIA
Weather problems have also affected Nigeria’s cocoa production, which is envisaged at 280,000 tonnes. The mid-crop beans have been reported to be small and low in weight, and have not been attracting better prices at the points of sales.
AMERICAS
Investments targeting pests and diseases prevention, the enhancement of productivity and quality of beans have supported cocoa production in Brazil which is forecast at 220,000 tonnes. At the time of writing, the State of Para had overtaken the State of Bahia to account for most of the country’s production. Unlike the top two leading producers in West Africa, Ecuador as the third largest producer, is expected to follow an upward trend for the season under review to 375,000 tonnes. Output from Peru and Colombia are anticipated to be 160,000 tonnes and 70,000 tonnes respectively. The promotion of development programs for the cocoa sector in these two countries are envisaged to pave the way for a progress in future production.
ASIA & OCEANIA
In the face of climate change, pests, diseases and competition from more profitable crops, production from Asia has not witnessed a significant upward trend. In Indonesia, Malaysia and Papua New Guinea, production is forecast at 180,000 tonnes, 665 tonnes and 42,000 tonnes respectively for the ongoing season.
GRINDINGS
Cocoa demand has held up on multiple fronts despite rising input costs, including high energy costs, supply chain issues and increase in interest rates among others. Indeed, demand has to date remained steady during the season and the reduction seen in the global supply has so far been less disruptive to the cocoa market. The latest reports from manufacturers and regional associations portray a positive outlook for demand. The world’s leading manufacturer of chocolate and cocoa products, Barry Callebaut, reported in its half-year 2021/22 results that global chocolate sales (in volume) recorded an outstanding performance of 9.9% by delivering strong volumes1.
Still, it is worth noting that with the current slowdown in the global economy, cocoa demand is subject to many uncertainties. Though at the time of writing demand was positive, the likelihood of consumers becoming more discretionary with spending and focusing on essential items (food and energy) could take a toll on cocoa demand as the year progresses.
Revised grindings for the current season are forecast to rise to 5.071 million tonnes. Europe is forecast to increase by 2% to 1.847 million tonnes and Africa by 4% to 1.091 million tonnes. A slight decrease of almost 1% is expected in the Americas with grindings pegged at 966,000 tonnes, while Asia and Oceania is anticipated to remain flat at 1.167 million tonnes.
Grindings in cocoa importing countries are projected to slightly rise by above 1% to 2.774 million tonnes. Data published by the German Confectionery Association revealed that grindings in Germany rose by 3.7% year-on-year to 96,498 tonnes for Q2.2022. Statistics published by the European Cocoa Association (ECA) showed that grindings by its members rose by 2% to 364,081 tonnes for Q2.2022. Based on the latest available statistics, grindings for The Netherlands, Germany and France for the current season are gauged at 630,000 tonnes, 480,000 tonnes and 140,000 tonnes respectively.
For the countries making up the North American Free Trade Agreement (NAFTA), data published for Q2.2022 by the National Confectioners Association revealed a year-on-year decline of 6.29% which amounts to 115,899 tonnes. The Secretariat’s forecasts for the United States, Canada and Mexico are 390,000 tonnes, 110,000 tonnes and 60,000 tonnes respectively.
Cocoa producing countries continue to witness the expansion and establishment of cocoa processing facilities. Grindings from producing countries, accounting for 45% globally, are forecast to increase to 2.297 million tonnes for the season under review. Côte d’Ivoire is forecast to see its grindings grow by almost 7% to 660,000 tonnes. Due to the decline in production, growth in grindings in Ghana remains uncertain and is pegged at 320,000 tonnes. For Southeast Asia, the Cocoa Association of Asia posted a year-on-year growth of 3.6% to 228,895 tonnes for Q2.2022. For the 2021/22 season, grindings in Indonesia and Malaysia are forecast at 470,000 tonnes and 360,000 tonnes respectively.
Alexis Rubinstein
