London cocoa futures will fall 6% by the end of the year, weakened by the prospect of rising production in Ivory Coast and Ghana, a Reuters poll of nine traders and analysts showed. However, prices should still post an annual gain following a sharp rise this month, it indicated.
London prices were seen ending 2020 at 1,850 pounds a tonne, down 6% from Wednesday's close, according to the median forecast of survey participants, but still 4% higher than the market close at the end of last year.
Respondents expected there would be a more balanced market in 2020/21, with a median forecast of a marginal deficit of 5,000 tonnes compared with a more significant shortfall of 70,000 tonnes in 2019/20.
They noted the decision by Ivory Coast and Ghana to charge a Living Income Differential (LID) effective the 2020/21 season could weigh on the future price. The world's top two producers announced in July 2019 that 2020/21 purchases must include the LID, a $400 premium to the futures price, in a bid to tackle pervasive farmer poverty. Funds raised will be used to help increase payments to farmers.