Global Cocoa Production Down 6%, Leading to Supply Deficit

Spend Matters welcomes this guest post from Avneet K. Deol of Mintec.

With chocolate being one of the most beloved foods worldwide, it is no surprise that manufacturers, consumers, and investors keep a close eye on cocoa supply and demand. As the global cocoa market has undergone some shifts in the past year, it is a good time to look at resulting price changes as well as prospects for 2016/17.

Dry weather conditions posed major challenges to West African cocoa farmers in 2015/16. The Ivory Coast, the world’s largest producer, saw cocoa bean production decrease 13% year-on-year in 2015/16 (September – October). As a result, overall global production is estimated down 6% year-on-year at 3.99 million tons.

This low global production has caused a supply deficit that dragged global ending stocks to 14-year lows, down 13% year-on-year at 1.38 million tons. World cocoa grindings for 2015/16 are forecast at 4.16 million tons, relatively unchanged year-on-year.

The Ivory Coast often experiences seasonal Harmattan winds: a hot, dry wind that blows from the Sahara Desert over West Africa and that is at its strongest in late fall and winter. However, in 2015/2016, the winds were stronger, started earlier, and lasted longer than usual, severely hampering production and significantly reducing the quality of the beans.


Due to the reduction in the quality of beans from West Africa, the source of supply has started to shift to the E.U. and the U.S. As a result, the grinding process of cocoa beans is shifting back to the traditional E.U. and U.S. markets, with the Netherlands claiming back its title as the world’s largest cocoa grinder, after losing it to the Ivory Coast in 2014/15.

However, this switch has led to a tight supply situation in the U.S. and the E.U. In particular, prices on ICE E.U. have reached record highs this year, up 13% since February. In contrast, prices for the dollar dominated contracts on ICE U.S., weakening 15% this year. The main reason for this has been the effect of the stronger dollar relative to the pound.

Looking ahead to the 2016/17 season, which started in October, the prospect for production in West Africa looks more favourable than 2015/16 due to the end of El Niño and abundant rainfall in major growing regions from August. In addition, the odds that La Niña – a weather phenomenon that usually occurs after El Niño – will occur have weakened to between 35-45%. Although La Niña is still a possibility, it is likely to be a weak event, and the cooler conditions may even benefit the cocoa crops.

In the short term, with the holidays around the corner, consumer demand is likely to pick up as we treat ourselves and loved ones to some chocolate.

Share on Procurious

Discuss this:

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.