By Marcelo Teixeira
NEW YORK, April 26 (Reuters) - The global cocoa market will switch to a small deficit of 8,000 tonnes in the 2021/22 season, following an estimated 123,000 tonne surplus in 2020/21, due to stronger consumption and drier-than-normal weather in West Africa, Rabobank forecast on Monday.
The large current surplus will disappear as demand rises steadily over the next six months and possibly over the next 12 months, said Andrew Rawlings, commodities analyst at the Dutch bank, in a report to clients.
"The potential for this appears underpriced in our opinion," Rawlings said, as cocoa continues to underperform nearly all other agricultural commodities this year and open interest in cocoa futures and options hover around the lowest levels in six years.
Rabobank sees production at top grower Ivory Coast falling from 2.21 million tonnes in 2020/21 to 2.15 million tonnes in the new season, while total global demand is expected to grow from 4.76 million tonnes to 4.9 million tonnes.
Aggregated cocoa grinds from Europe, Asia and North America in the first quarter, which recovered from lows during pandemic, are an indication of the rebound in demand.
"In our opinion, (grindings) still have the capacity for further growth," the bank said, estimating an increase of 8% in the second quarter.
Others in the industry have a different view.
"One third into the current quarter, we see no evidence of a strong demand recovery," said Marcelo Dorea, senior softs trader at First New York.
He expects an increase compared with the second quarter of last year, a very weak period. But not near 8%.
The lack of social events, such as parties and conferences, hit the demand for the chocolate-making ingredient during the pandemic.
That, coupled with good production in 2020/21, depressed the market. Cocoa futures in New York are trading nearly 15% lower than levels seen before the pandemic CCc2.
(Reporting by Marcelo Teixeira; Editing by Richard Chang and Richard Pullin)
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