By Carolyn Cui

Cocoa prices rebounded on Thursday from three-year lows, boosted by an industry organization's outlook for improving global demand.

Prices of cocoa futures for March delivery added 0.3% to $2,395 per metric ton on the ICE Futures U.S. exchange, up from Wednesday's closing level at $2,389, the lowest since August 2013.

The International Cocoa Organization on Wednesday reduced its estimate for the global cocoa deficit in the 2015-16 season due to upward revisions to production in countries including Ivory Coast, Indonesia and Peru. Still, global production as a whole dropped roughly 5% from the previous season. Production in Africa, which produces about 73% of the world's cocoa, fell nearly 4% overall in the season ended this past September to 2.494 million tons, the ICCO said.

The London-based organization also said processing of raw cocoa into cocoa products, known as grinding, dropped in the 2015-16 season, by 0.3% or 12,000 tons, to 4.141 million tons.

"While some of the ICCO numbers were a bit surprising, they put more emphasis on an improving demand outlook to lift prices well clear of their recent lows," according to the Chicago-based Hightower Report.

ICCO said demand would outstrip supply by 150,000 metric tons, down from its August estimate of 212,000 tons.

However, some market participants see more risks to the downside, as some suppliers are holding back from sales. Cocoanect B.V., a global cocoa trading company based in the Netherlands, noted that major producing countries such as Ivory Coast and Ghana have been reluctant to sell their crops amid the recent downturn in prices.

"With bigamounts of cocoa overhanging the market there are further risks to downside despite already very low outright price levels," analysts wrote in a note to clients. "Origin sellers would need a sharp rebound in the market, initiated by a political or a weather related event in order to turn the tide."

In other markets, raw sugar for March was down 1.8% to 19.45 cents a pound, arabica coffee for March lost 2.9% to $1.4625 a pound, frozen concentrated orange juice futures rose 2.4% at $2.2275 a pound, and March cotton was up 0.7% to 72.08 cents a pound.

Write to Carolyn Cui at carolyn.cui@wsj.com

(END) Dow Jones Newswires

December 01, 2016 12:37 ET (17:37 GMT)

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