(Ecofin Agency) - The International Cocoa Organization (ICCO) forecasts for cocoa surplus for the 2016/2017 season was scaled up 382,000 tonnes or 44.7% more than the previous estimate (264,000 tonnes) from last February, Reuters reports.

According to the organization, this increase is due to a record global output of 4.69 million tonnes which is now expected, as compared to 4.55 million tonnes earlier. This growth will be driven by the main producing countries, Ghana and Côte d'Ivoire.

For the third consecutive year, Ghana sees its output rise, standing at 950,000 tonnes, the second best level in its history, up 100,000 tonnes from previous estimates.

For its part, Côte d'Ivoire’s output will increase by 80,000 tonnes to stand at 1.98 million tonnes, a new record that will reinforce its position as leading global producer of the crop, which it snatched from Ghana since the 1977/78 season.

However, ICCO highlights that the surge in outputs of the two main world suppliers should also stimulate cocoa smuggling. Mainly as result of a 36% decrease in minimum guaranteed price to producers in Cote d’Ivoire during the intermediate harvest, at FCFA700 per kilogram of beans, against FCFA1100 in the main season.

In regards to global prices, the hike in output should bring them down, in line with recent World Bank forecast. Indeed, the institution estimated in April that world's cocoa prices will drop by 25% this year.

Espoir Olodo