However, estimates for the growing season, which ended September 2005, will come as good news to an industry under increasing pressure from rising global consumption.
Although more cocoa beans are being ground, end of season stocks will be slightly higher that initially forecast, according to the International Cocoa Association (ICCO).
The revised estimate for world production now stands at 3,289 thousand tonnes, up from the ICCO's initial forecast of 3,194 tonnes. The estimated production is down 6.6 per cent on the previous growing season.
World grindings are forecast at 3,298 thousand tonnes, an increase of three per cent to from the original estimate of 3,268, the ICCO stated.
The ICCO says even with the fall in production, the world's cocoa deficit will be cut by more than half, to 42 thousand tonnes from 106 thousands tonnes.
End of season stocks for 2005 are estimated at 1,444 thousand tones, 2.8 per cent down on the previous growing season.
A contributing factor to these revised estimates could be the calmer than expected situation in the world's biggest cocoa producer, the Ivory Coast.