The Cocoa Producers' Alliance (COPAL) expects global cocoa supply to exceed demand by around 50,000 tonnes this year, in contrast to market expectations of a deficit, Secretary-General Sona Ebai said on Friday. "I don't think we will see a deficit this year. I think it will be a surplus of slightly over 50,000 tonnes," Ebai told Reuters in an interview. "For us as cocoa producers, that is not a positive development. If prices stay where they are, in the range of 850-1,000 pounds, that would be a good price compared to 575 pounds we saw in May 1999."
His forecast compares with an estimated global surplus of 200,000-240,000 tonnes in the previous season.
COPAL is a Lagos-based organisation that represents countries accounting for 75 percent of the world's 3 million tonnes of cocoa, including top growers Ivory Coast and Ghana.
Ebai told Reuters in an interview that "timid" arrivals in war-torn Ivory Coast, which grows over 40 percent of world cocoa, were being compensated by a dramatic increase in output from Ghana, where systematic spraying has reduced disease and improved the harvest.
He said world production for the 2003/2004 season was 3.2 million tonnes and this year's output would be slightly below that.
"I don't believe there will be a sizeable drop," he said.
Ebai spoke on the sidelines of a cocoa conference in Nigeria.
London cocoa futures for nearby delivery were trading at 851 pounds a tonne on Friday, down from a 13-month peak of 1,021 pounds in mid-November.
Prices spiked late last year on expectations unrest in Ivory Coast would hurt supply but have since declined about 17 percent as speculators pulled out of the market.
"All the predictions for supply deficits are not coming to fruition mainly because of increases in production," Ebai said.
Ebai said output from Ghana, the world's second largest producer, had increased by 150,000-200,000 tonnes in the last two years, while Nigeria and Cameroon were also making steady gains.
With increases also coming from Vietnam, Brazil and other Latin American countries, Ebai said production was bound to rise globally in the long run.
Relatively high cocoa prices over the last couple of years have encouraged more planting and improved farming techniques, Ebai said.
"Recently we saw cocoa up to 1,000 pounds in London. More money coming in to farmers' hands allowed them to better manage their farms. Anything above 850 pounds would increase (supply)."
Bean values are seen making strong gains later this year amid concern a drop in West African production will cause the world cocoa balance to swing to a deficit.
Demand may beat output by 144,000 tonnes in 2004/05, according to the median estimate of seven analysts and traders polled by Reuters last month.
COPAL is concentrating on efforts to increase consumption of cocoa in countries such as Nigeria, to prevent production gains contributing to any fall in price.
"If any serious attempt is made (to encourage) consumption, then any increase in production will not have a impact on the market."
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