The International Cocoa Organization (ICCO) has revised down the estimates for 2017/18 global cocoa output and has raised concerns about the possibility of a 2018/19 supply deficit.
While the output has been revised up by 1,000 tonnes for the 2016/17 season, the ICCO reviewed the global production of cocoa beans down by 7,000 tonnes in their last estimates for 2017/18. The main dynamic behind this drop is the production weakening in both the Ivory Coast and Ghana, which has fallen by near 126,000 tonnes y-o-y, influenced by the low precipitations during the mid-season in West Africa. The ICCO also lowered the global surplus estimates to 22,000 tonnes compared to the 31,000 tonnes previously projected, supported by higher production in South America by 8% y-o-y.
All attention is now on the 2018/19 season, which started in October 2018 for some regions, and might lead to a supply deficit after two years of surplus and could support a price increase. The probabilities of an El Niño episode in 2019 according to the US Climate Prediction Center could be detrimental to cocoa bean harvests in South America. Moreover, certain concerns have been raised over the production in the Ivory Coast, following first signs of low-quality harvests and the liquidation of the first national exporter SAF-Cacao, leading to lower pace of exportations.