Cocoa - Commerzbank update8 Apr 2012 15:19
Cocoa prices recorded last week are now at a 12 month low, with further significant falls due through 2012. As of last week prices had dropped 35% from their 2011 average. This is going to have a real positive impact on profit.
Commerzbank
"It is clear that concerns about a supply shortage were unfounded. In fact, a record harvest of 1.5m tonnes has recently been achieved in the Ivory Coast, as in neighbouring country Ghana of over 1m tonnes.
Commerzbank forecasts for New York cocoa price, 2012
Q1: $2,300 a tonne
Q2: $2,400 a tonne
Q3: $2,500 a tonne
Q4: $2,500 a tonne
Forecasts for average price, near-term contract, during the quarter
Year average: $2,450 a tonne, ($2,950 a tonne in 2011)
"The unexpected resurgence of La Niña well into the year 2012 could in fact prove advantageous for cocoa production in Western Africa. This could result in another good season.
"After an estimated record 4.2m tonnes in 2010-11, more than 4.1m tonnes could still be produced worldwide in 2011-12.
"After the large supply surplus in 2010-11, at least a modest oversupply could be reported again, despite robust grinding figures which, however, will no longer rise quite as sharply as in 2011.
"The majority of speculative financial investors is still betting on falling prices. Net short positions even have been increased further recently. This could lead to a rise in prices if these investors cover their short positions.
"All in all, despite growing demand, the cocoa price is likely to have only limited upward scope given the large supply volumes. We therefore expect only a modest rise in cocoa prices in 2012."
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