JOHANNASBURG (Commodity Online) : Rising hopes for West African cocoa production this year could help balance out an expected deficit in 2011-12, the head of the International Cocoa Organization said.
Ivory Coast, the world's largest producer, could reach 1.4 million metric tons in the current 2010-11 crop year, Executive director Jean-Marc Anga told Dow Jones Newswires.
Neighboring Ghana is also "on course" to reach its target of 1 million tons by the end of the season, despite flooding in cocoa-producing regions in the east of the country, he said.
Anga said he expects the ICCO will increase its current estimate of a 189,000 ton surplus for 2010-11, leaving markets in "more of a balance" than many forecasters currently expect next season.
"Most analysts are still expecting a deficit next year but we can see the surplus increasing between now and then," Anga said.
However, increasing consumption is likely to keep prices supported at $3,000/ton for the next six months, he said.
Demand is expected to rise to a record high of more than 3.9 million tons in 2011-12, up from 3.8 million tons this year, driven by Asia and the developing world as well as "robust" consumption in traditional markets, he said.
Cocoa grinding is also expected to rise in Ivory Coast following a bloody conflict there earlier this year. The country lost its place as the world's second-largest processor as companies fled during the political turmoil.
But going forward, he remains concerned that the proliferation of uncoordinated projects to expand cocoa production in several parts of the world could have a severe impact on prices.
"We do not believe that production should go all out in meeting demand--and go beyond--as the impact on prices will be severe," he said.
With the new government of Ivory Coast due to launch initiatives to boost production in the near future, including tackling structural issues such as aging trees and little use of inputs, Anga said production there could rocket.
"If they go all out to increase investment in the next five to 10 years they could reach 1.8 million to 2 million tons," he said. Neighboring Ghana, considered a major cocoa success story, is expected to produce 1.2 million tons by 2012-13.
He added that the ICCO won't lift its estimate for Indonesia, another key producer, where production has been severely damaged by rain and disease.
"The pest and disease situation there is quite worrying," he said.
