A bumper crop in West Africa will drive down prices, say Rabobank

A bumper crop in West Africa will drive down prices, say Rabobank

Global cocoa prices are set to fall over the next year thanks to a bumper crop forecast in west Africa, according to a new report from Rabobank.

In its agribusiness commodity outlook for 2012 called Down But Not Out, Rabobank says that larger-than-expected crops and lower demand for cocoa caused by economic contraction may see cocoa prices drop from US$2,400 a tonne in the fourth quarter of 2011 to US$2,300 this time next year.

"Abundant supply of cocoa beans and better expectations for the 2011/12 crops are expected to lead prices lower in 2012," the report said.

It added: "The cocoa bean market is subject to economic contraction as chocolate confectionery is subject to demand destruction when incomes are under pressure."

This flat demand for cocoa for chocolate confectionery could, however, be offset by high demand for cocoa powder products, which are used in a variety of non-chocolate products, Rabobank said.