Boston, MA -- (ReleaseWire) -- 01/09/2014 -- We have moderated our bearish outlook on Cameroon's coffee prices, which has given us a slightly more positive outlook for the sector. The slow start to the cocoa season, apparently due to heavy rainfall, emphasises the sector's vulnerability to weather, but we are not worried at this early stage. Longer-term prospects remain bright, with cocoa prices expected to climb higher and remain high to 2017. Rainfall has also led to a downgrade of expectations for the sugar harvest. Corn production will benefit from the World Bank, which is supporting farmers, but increasing demand, as a result of population growth, will require further efforts to improve inputs and yields.
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- Corn consumption growth to 2017: 35.6% to 2.2mn tonnes. Rising incomes and a growing population will see increased demand for the staple grain.
- Cocoa production growth to 2016/17: 33.3% to 300,000 tonnes. Higher prices and increased government and private investment will drive the sector.
- Sugar consumption growth to 2017: 23.2% to 306,800 tonnes. Significant increases in GDP per capita, rapid population growth and a fast-expanding food and drink sector will support growth.
- BMI universe agribusiness market value growth: 7.3% to US$1.38bn in 2013 (up from US$1.28bn in 2013; forecast to grow by an annual average of 7.1% to 2017).
- 2014 real GDP growth: 4.6% (up from 4.4% in 2013; forecast to grow by an annual average of 4.8% between 2014 and 2017).
- 2014 consumer price inflation: 2.5% year-on-year (2.5% in 2013; forecast to grow by an annual average of 2.5% between 2014 and 2017).
Key Revisions To Forecasts
- Long-term coffee production forecast revised up to 816,000 tonnes in 2016/17 (from a previous forecast of 759,000 tonnes). We now expect prices to recover slightly in the latter years of the forecast period from the lows of 2013 and 2014.
Higher cocoa prices are expected to increase output in Cameroon. BMI is now forecasting cocoa to average higher at GBP1,560/tonne in 2013 and GPB1,750/tonne in 2014, before averaging GBP1850/tonne out to 2017. We see supply deficits for each year of our forecast period to 2017, with weaknesses in the cocoa sectors of Cameroon's West African rivals, particularly Cote d'Ivoire and Ghana. We expect that demand will remain subdued in 2013 and 2014 due to lack of economic growth in the eurozone, but we see consumption growth improving in the latter years of our forecast. If the Cameroonian government can support the industry sufficiently as major producers struggle, local farmers could take advantage of a recovering market.
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