Cargill sees world cocoa market near balance

ABIDJAN (Reuters) - Cargill expects world 2012/13 cocoa supplies to balance demand due to improved weather conditions in West Africa, the U.S. agribusiness company said on Wednesday.

Some traders have forecast a global deficit of as much as 150,000 tonnes, amid concerns that poor weather earlier this year in the world's leading cocoa producing region could affect output.

"If you look to Ivory Coast, if you look to Ghana, then it's too early to say what the cocoa crop will be. The mid-crop is still not made and that will take time," Jos de Loor, managing director of cocoa and chocolate at Cargill, told Reuters.

"It definitely looks better than it did six weeks or two months ago, because we got rains...Overall, when you look to the world, we expect that we will have a more or less balanced S(supply) and D (demand)," he said.

Cargill is among the world's leading processors of cocoa and operates facilities in top grower Ivory Coast with a capacity to grind 120,000 tonnes of beans annually.

The country's government this week announced a new tax structure for exported semi-processed cocoa products, levying export tax based on bean equivalent weight.

Grinders were previously taxed based on the nature of the product exported, and have complained that the new measure penalises local processing.

"Basically the decree has abolished all incentives for processing in Ivory Coast," de Loor said on the sidelines of a cocoa conference in Ivory Coast's commercial capital Abidjan.

He said the company was in the process of reviewing the implications of the decision, which became public on Tuesday and follows the scrapping last month of a 20-year-old tax break given to local grinders to encourage more domestic processing.

"It's too early to say what the potential consequences are going to be. We are doing the evaluation, and then we are going to have to see," he said.

In 2010, Ivory Coast became the world's top cocoa grinder with a capacity of 532,000 tonnes. Currently around 35 percent of beans are processed locally, but the government is aiming to locally grind half of its cocoa bean production by 2015.

"If you talk about this only affecting potential newcomers or is this having an impact on the ones who are already here in the country for many, many years like ourselves, yes it will have an impact," de Loor said.

Source: http://news.yahoo.com/cargill-sees-world-cocoa-market-near-balance-052228451--sector.html

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