World cocoa sector could be in surplus for years - ICCO | Reuters

By Joe Bavier and Ange Aboa | ABIDJAN ABIDJAN The world's cocoa sector may be facing a structural surplus that risks depressing global prices and dealing a blow to producer country and farm revenues in the coming years, a senior official with International Cocoa Organization (ICCO) said on Wednesday.After rising steadily for several years, cocoa futures have tumbled since September with New York cocoa CCc2 falling to its lowest level in nearly a decade earlier this month on the back of bumper crops around the world.Global production is set to climb by almost 15 percent in 2016/17, according to the ICCO. Demand is failing to keep pace, resulting in a projected global surplus of 264,000 tonnes.'Our fear is that the world cocoa sector has entered a period of structural surplus that is likely to last for some time to come,' ICCO Executive Director Jean-Marc Anga told Reuters during an interview in Abidjan, Ivory Coast.Expectations of rising global chocolate consumption coupled with ageing farmers and plantations in top producing countries in West Africa has long raised concern over the potential for a structural cocoa deficit. 'I would like to see the person who would stand tall and say that theory still holds

Reuters March 16, 2017 04:30:08 IST
World cocoa sector could be in surplus for years - ICCO
| Reuters

World cocoa sector could be in surplus for years  ICCO
 Reuters

By Joe Bavier and Ange Aboa
| ABIDJAN

ABIDJAN The world's cocoa sector may be facing a structural surplus that risks depressing global prices and dealing a blow to producer country and farm revenues in the coming years, a senior official with International Cocoa Organization (ICCO) said on Wednesday.After rising steadily for several years, cocoa futures have tumbled since September with New York cocoa CCc2 falling to its lowest level in nearly a decade earlier this month on the back of bumper crops around the world.Global production is set to climb by almost 15 percent in 2016/17, according to the ICCO. Demand is failing to keep pace, resulting in a projected global surplus of 264,000 tonnes."Our fear is that the world cocoa sector has entered a period of structural surplus that is likely to last for some time to come," ICCO Executive Director Jean-Marc Anga told Reuters during an interview in Abidjan, Ivory Coast.Expectations of rising global chocolate consumption coupled with ageing farmers and plantations in top producing countries in West Africa has long raised concern over the potential for a structural cocoa deficit.

"I would like to see the person who would stand tall and say that theory still holds. Our view over the past five to ten years has never been that of a structural deficit," Anga said.Ivory Coast, the world's top producer, has been the hardest hit by the rapid drop in prices over the past six months. A wave of export contract defaults along with higher than expected production there have caused a glut of beans at ports and in upcountry warehouses, leaving farmers struggling to sell their crops and fuelling social unrest.

"From where I'm sitting, all the noises I am getting from producer countries are of serious concern because the current global price is affecting revenue at the government level," Anga said. ICCO officials will meet with its members, which include both producer and consumer countries, in April to seek solutions that will help reverse the slide in prices.

The International Cocoa Agreement, the body's founding document, contains a provision that allows producer countries to discuss and coordinate their production policies, and Anga said he expected them to take advantage of it. "I don't really see the logic of continuing to increase production when we see the effects this has on countries," he said. "I think they are all aware of the need to have a more rational approach to their production policies." The ICCO will also discuss ways to increase consumption.With traditional markets in Western Europe and North America close to saturation, Anga said it was weighing strategies for penetrating markets in the developing world and discussing bringing China and Indian into the ICCO as members. (Editing by Mark Potter)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.