The outlook from an area that accounts for nearly two-thirds of the world's beans could pave the way for a global supply surplus next year, after fears of shortages drove cocoa futures to 30-year highs in December.
"Prices have already stabilized, and part of it is the production outlook from West Africa," said a US-based cocoa analyst. "The market is also starting to focus more and more on how next year will look." The top four African cocoa growers - Ivory Coast, Ghana, Nigeria and Cameroon - will grow about 2.36 million tons combined this year from 2.42 million last year, according to official forecasts compiled by Reuters, bringing it to the lowest since the 2006-07 crop.
But output could move back up over 2.5 million tons over the next two years if Ghana manages to stick to a plan to raise output to 1 million tons by 2012, from current annual output of around 700,000 tons.
"With Ghana kicking it up, the market may to have to deal with higher supply in the coming years," said Adam Klopfenstein, senior market strategist at MF Global's Lind-Waldock division in Chicago. "If the demand doesn't come in to soak that up we're going to see some pressure on prices." The International Cocoa Organization predicted earlier this month that global cocoa supplies would fall short of demand this year by some 18,000 tons, but anticipated a surplus next season of as much as 90,000 tons as farmers respond to higher prices.
Cocoa futures soared to a 30-year high over $3,000 a ton in December before pulling back to around $2,900.
The bulk of this year's decline in Africa will come from No. 1 world grower Ivory Coast, where plantations are suffering from persistent underinvestment since a 2002-03 civil war.
The West African country's representative to the ICCO said last week output during the current 2009-10 season would decline to 1.2 million tons from 1.223 million in the previous season due to the spread of swollen shoot disease.
He added production could drop to an even 1 million tons in the coming years as the disease spreads.
Ivory Coast's government is keen to revamp the sector amid complaints from farmers that they are not making enough money to maintain their plantations, but a lingering political crisis has slowed reform efforts.
Official output from No. 2 world cocoa grower Ghana is also exected to slip this year, to 700,000 tons from 710,000 tons, though the head of the country's marketing body said the drop would be due to smuggling keeping tonnage of the books rather than a slump in production.
The country has said it is committed to its ambitious production target of 1 million tons of annual production within the next two years and will increase farmer incentives and encourage the use of inorganic fertilizers to raise yields.
If successful, the program could put Ghana in the running to overtake Ivory Coast as the world's top cocoa producer and could help push regional cocoa production above 2.5 million tons for the first time since the 2007-08 season.
Smaller producers Nigeria and Cameroon, meanwhile, are each predicting significant increases in output during the current season, though not enough to offset the expected declines elsewhere.
