Is there a cocoa bull lurking in the shadows?

Activity in the cocoa market has been somewhat enigmatic. Without the benefit of any obvious bullish fundamentals, and in a generally weak commodity environment, it’s surprising that prices have been relatively strong.

West African output for 2012-13 has been running ahead of last year and at a stronger pace than analysts had forecast earlier in the season. With the main crop season long over and the mid-crop currently in harvest, Ivory Coast port arrivals stand at 1.38 million tonnes, 6% above last year at this time.

Port arrivals in Ghana, the world’s second-largest producer, are also well ahead of both last year and expectations. Early forecasts put total output at 800,000 tonnes. By the end of May, arrivals had reached 750,000 tonnes, so it’s a good bet that total production will reach 900,000 tonnes. Nigeria’s significance as a producer had been dwindling, but as a result of excellent precipitation this year, it will harvest a bumper crop of 280,000 tonnes, about 40% higher than in 2011-12.

Finally, in West Africa, Cameroon is maintaining its status as an up-and-coming producer with output expected to reach 230,000 tonnes, an improvement over last year’s 220,000 tonnes and just shy of the record 240,000 tonnes harvested in 2010-11.

Output from the world’s other significant producers, Indonesia, Brazil and Ecuador, is steady at the levels achieved over the past couple of years.

While prices of many agricultural commodities having been fading back into pre-bull-market territory, there are two issues that have kept cocoa prices at their current levels.

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