Barry Callebaut chief sees global cocoa surplus

The world's biggest maker of industrial chocolate Barry Callebaut said on Tuesday there will be a global cocoa surplus this year and possibly the next, taking a more bearish perspective than some other forecasters so far. "This year we will have more beans than we need, so we will have a surplus," Juergen Steinemann, chief executive of the Swiss chocolatier told Reuters as the company inaugurated its first chocolate plant in Chile.
Steinemann did not state the estimated size of the surplus for the 2014/15 (October/September) marketing year but said "it will be more towards a surplus" the following year as well.
"We have a surplus of cocoa beans opposite to the demand, so therefore prices should have a tendency to slide to the side or below," Steinemann said. Last week, commodities trader Olam International said it expected a global cocoa deficit of more than 120,000 tonnes in 2014/15 due to smaller crops in top growers Ivory Coast and Ghana. The week prior, closely followed analyst Steven Haws of Commodities Risk Analysis reported the market could fall to a deficit in 2014/15.
These forecasts come after the International Cocoa Organization raised its estimate for a 2013/14 surplus to 53,000 tonnes and said demand is likely to outstrip production in the next few years, though stocks were seen sufficient to ensure supplies. "I disagree with a lot of things which you read in the last weeks in the press that there's shortage in the industry. I just don't believe it," Steinemann said, in reference to media reports that there is a looming cocoa shortage.
"I see it is financial investors behind that (who) are trying to talk the market up." The large chocolate maker, which already has plants in Brazil and Mexico, sees Latin America as ripe for growth as consumer purchasing power rises. "I see growth opportunities in Argentina. You have to look through the structural crisis the country is in. The consumers are there and they want to consume," he said. "I don't see why over time we shouldn't be in Argentina," Steinemann said, adding the company was also interested in expanding into Colombia and Ecuador.