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Chocoholics Hit By West African Drought

(c) Sky News 2012

Chocolate-lovers could be in for a shock as the price of cocoa looks set to soar.

West Africa, the world's top region for growing cocoa, has experienced extremely dry conditions this year, which is expected to trigger a cocoa shortfall on the global market into 2013.

On top of that, experts have forecast El Nino, a weather phenomenon which would mean a warmer, drier winter in West Africa.

Jonathan Parkman, joint head of agriculture at broker Marex Spectron said: "If we have normal weather we should expect a small surplus but actually, it doesn't look like we're going to get normal weather this year, the main reason for that being the development of El Nino."

According to a recent poll by Reuters, there could be a 40,000-tonne global cocoa shortage this year and next.

A group of analysts and traders predicted that the Ivory Coast, the world's top cocoa producer, would see its output drop to 1.35m tonnes. That compares to the International Cocoa Organisation's figure of 1.41m tonnes for the previous year.

They also said the next largest producer, Ghana, would likely see a fall in production of up to 40,000 tonnes.

However, the warnings follow two good years for cocoa production and some say there is nothing to be concerned about.

One analyst at a European commodities trade house said: "The outlook remains for a crop being slightly below average in Ivory Coast and a bit more troublesome in Ghana.

"A sub-trend crop is normal considering we just came out of two very good years."

He added: "The current dryness in Ivory Coast, which seems to have caught the attention of a few people, is insignificant in the context of how much stock we have in Europe (Chicago Options: ^REURUSD - news) and the US right now."

Despite this, trading on the Liffe Cocoa prices hit a nine-month high on Friday, with dealers citing concerns about the weather in West Africa.