Cocoa prices are expected to make strong gains in 2005 as production lags demand for the first time in three years and political instability in Ivory Coast aggravates supply worries, a Reuters poll showed on Tuesday. London's benchmark cocoa futures are seen rising 8.3 percent to 913 pounds a tonne by the end of the first quarter and may gain 17 percent to 983 pounds by the end of the year - according to the median forecast of seven analysts and traders polled by Reuters.
By the end of 2005 price forecasts ranged from a low of 880 pounds a tonne to a high of 1,150 pounds in London and in New York they ranged between $1,350 and $2,000 a tonne.
"The fundamental background is supportive for prices and so is the (Ivorian) political situation," Calyon analyst Jonathan Parkman said. "There is significant upside potential."
New York cocoa prices are seen rising to $1,550 a tonne by the end of March, up 2 percent from the end of 2004. They are forecast to jump 10 percent by year end to $1,700.
While fund selling has recently pressured London's March contract to a six-month low, bullish fundamentals are expected to come to the fore later this year.
A deficit of 144,000 tonnes is the median forecast for the 2004/05 cocoa season due to a drop in West African output, according to the survey. There was an estimated surplus of 200,000-240,000 tonnes the previous season.
The poll forecast a median total crop for Ivory Coast of 1.33 million tonnes and a harvest of 580,000 tonnes for Ghana in 2004/05, both of which are down on the previous year.
Arrivals of cocoa at ports in Ivory Coast are 12 percent down from a year ago after a season dogged by delays. The country produces over 40 percent of the world's 3 million tonnes of annual cocoa production.