NEW YORK - The cocoa market is expected to move from a deficit in the 2021/22 season (Oct-Sept) to a balanced situation in 2022/23 as production grows in Africa, but prices are seen rising slightly nevertheless, according to a Reuters poll of eight analysts and brokers.
The median forecast for the global cocoa supply balance in 2021/22 is for a deficit of 190,000 tonnes, compared to a shortfall of 150,000 tonnes seen in the previous poll in February.
But poll respondents believe higher production in the new crop will lead production to exactly match demand, with no surplus or deficit foreseen.
Poll participants see production in the world's top grower of the chocolate-making ingredient, Ivory Coast, growing to 2.3 million tonnes in the new season that starts in October from 2.18 million tonnes in the current crop.
They expect output in Ghana, the second largest producer, to grow to 825,000 tonnes from 700,000 tonnes.
Both countries are having mostly positive weather in the development stage of their crops.
But despite higher production, brokers and analysts project a small recovery on cocoa prices.
New York cocoa futures are seen ending 2022 at $2,600 per tonne, about 8% above the closing price on Thursday.
London cocoa futures are seen closing the year at 1,857 pounds ($2,264) per tonne, 2.5% higher than Thursday's close.
The median view for a slight recovery in prices despite the outlook for higher production comes from the perception that the worst is behind the market, as well as the potential for funds covering shorts.
"I see a positive macroeconomic outlook as the recession narrative fizzles out and we are over with the impact (to demand) of the Russia-Ukraine war,", said a U.S.-based trader.
"Speculators, managed money are net short on cocoa. Any negative production news or a boost in chocolate sales could result in longs re-entering, thus driving prices higher," said Paul Joules, an analyst with Rabobank.
(Reporting by Marcelo Teixeira; editing by Jason Neely)