Global Cocoa Market Faces Growing Deficit as Supply Tightens, Demand Remains Strong

The global cocoa market is facing a significant deficit, with lower production and a slowdown in processing activities at origin putting pressure on supplies, according to the latest statistics released by the International Cocoa Organization (ICCO).

The report forecasts a larger-than-expected deficit for the 2023/24 cocoa year, driven by reduced cocoa production from leading producing countries. Global cocoa production is projected to decline by 11.7% to 4.461 million tonnes, while global grindings are forecast to decrease by 4.3% to 4.855 million tonnes.

"As the 2023/24 season progresses, it is certain the season will end in a higher deficit than previously expected," the ICCO report states. "Much lower cocoa supplies from the leading producing countries have further extended the supply deficit."

Table: Summary of Latest Estimates for Cocoa

Despite record high cocoa prices, cocoa grinding activities in importing countries have remained robust, suggesting that consumer demand for cocoa products has held strong. However, the report notes a slowdown in grinding at origin, highlighting the difficulties faced by producing countries in keeping up with processing demands due to limited cocoa bean availability.

"Though at the start of the season, there was uncertainty regarding cocoa demand due to increasing cocoa prices, current available data reveal that cocoa grinding activities have so far been unrelenting in importing countries despite the record cocoa price rallies," the report explains. "However, grinding at origin which was earlier on viewed as an impetus to prop up demand, as producing countries engaged earnestly in value addition investments, has slowed down due to the lack of beans."

The report also highlights a decline in global cocoa trade during the October-December 2023 period. Global exports of cocoa beans and semi-finished cocoa products reached 2.36 million tonnes, a decrease of almost 6% compared to the same period in the previous season.

"The decline in trade activities may be a consequence of the supply tightness from top producing countries in West Africa," the ICCO report concludes.