Chocolate prices set to fall as cocoa surplus seen at six-year high

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Chocolate prices set to fall as cocoa surplus seen at six-year high

By Marvin G. Perez
Updated

It's a good news day for chocolate lovers: Prices for chocolate are set to fall as the world cocoa market shifts from a deficit to the largest surplus in six years, according to the International Cocoa Organisation.

Global production will top demand by 264,000 metric tons in the 2016-17 season, which started in October the London-based group said on Tuesday in a report. The deficit was 196,000 tons in the preceding year.

World output is seen rising almost 15 per cent to 4.55 million tons in the current season, with gains in Ivory Coast, the top grower, as well as in Ghana, Indonesia and Ecuador. In contrast, worldwide grinding of cocoa beans -- a measure of demand -- will rise just 2.9 per cent to 4.24 million tons, the group said.

The shift in the supply and demand dynamics of the cocoa market has weighed on prices in the past 12 months. Cocoa futures have slumped about 35 per cent in New York over the period.

The fall in cocoa prices decline is expected to make finished cocoa and chocolate products cheaper.

The fall in cocoa prices decline is expected to make finished cocoa and chocolate products cheaper.

If that decline is sustained in the months ahead, prices for finished cocoa and chocolate products are expected to drop, thereby supporting consumption, the group said.

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"It may take time for the reduction in the cost of the cocoa beans to be passed on to consumers," the organisation said in the report.

Bloomberg

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