Cargill Cocoa & Chocolate

Cocoa outlook: four questions for our supply and demand expert Job Leuning (29/10/2010)

What is your outlook on the new crop?
After the very poor main crop in 2009/10, excellent weather and increased farmer activity are expected to help the 2010/11 crop in Côte d’Ivoire to its highest level in three years. Farmers have raised input to their farms after record farm gate prices last year and the rapid development of Cargill’s Farmer Field Schools program.

How is demand at present?
Demand for cocoa products and chocolate has rebounded to pre-recession levels. However, we have missed the usual 2-3% annual growth during these two years. We are optimistic for 2011, believing that we will return to normal demand growth rates of approximately 2.5% versus 2010. Emerging markets are expected to lead the demand growth.

What is your view for the longer term?
To meet annual growth in demand the world will need another 700,000 to 1 million tonnes of cocoa by the year 2020. Global supply will need to increase significantly to keep pace. Renewal of farmers’ tree stocks, supporting farmers in raising yield and stimulation of production in less traditional cocoa countries are among Cargill’s key strategies.

Can you comment on the current cocoa prices?
Although prices have come down since the peak in July due to the improved crop outlook, historically they are still relatively high. This can be interpreted as bad news for the consumer, but ironically it can have benefits in the long term. Higher prices increase farmers’ income, which in turn tends to boost future production.

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