Cocoa prices nudged higher after data showed European processing
volumes ended last year more strongly than investors had expected, offsetting
weak Malaysian statistics and mild disappointment at Barry Callebaut growth.
European cocoa processers ground 348,406 tonnes of beans in
the October-to-December period, up 6.2% year on year, the European Cocoa Association
Such growth was the strongest rate in more than two years,
and beat expectations of a rise of about 5%.
And it came in a critical quarter, with the period, including
Christmas, historically an important one for chocolate groups, but especially
when investors are looking for signs of improved economic growth feeding
through into cocoa demand.
Although "judging by the price action" in the run-up to the
data, traders were "expecting a strong number", according to Marex Spectron,
the figure proved sufficiently upbeat to help cocoa futures extend gains.
Cocoa for March stood up 0.3% at £1,768 a tonne in London in
late morning deals, with New York cocoa for March up 0.6% at $2,767 a tonne.
Indeed, the rises defied downbeat data from Malaysia, Asia's
top cocoa processor, where volumes tumbled 9% to 70,064 tonnes in the October-to-December
Many Asian processors are said to be lumbered with high
stocks of cocoa powder, with cocoa butter one of the main processing products,
after overproduction thanks to a run-up in prices into early 2012.
Meanwhile, Barry Callebaut, responsible for processing 23%
of the world's cocoa crop, revealed volume growth in the September-to-November
period of 4.6%, excluding its acquisition of the Petra Foods bean processing business.
That compared with the 8.3% growth achieved a year before.
Including the acquired business, growth was 19.9%, below market expectations of
a 21% figure.
Barry Callebaut data showed that the group's sales volumes
far outperformed in the Americas, but were a little below the average in
Asia-Pacific and in Europe, where the group said it "still faced some capacity
Revenues rose 21% to SFr1.52bn including the Petra takeover,
equivalent to growth of 5.5% excluding the acquired business.
Juergen Steinemann, the Barry Callebaut chief executive,
said that the group had made a "solid start" to its fiscal year, which began in
September, adding that its "growth drivers – geographic expansion, outsourcing
and partnership agreements, and our gourmet business – have maintained their
Barry Callebaut shares stood 1.0% lower at SFr1106.
'Very good crops'
The group also highlighted the impact of
stronger-than-expected data from West Africa on cocoa delivery volumes in
undermining the rally in cocoa futures, which remain below two-year highs set
late last year.
"Main crops in Ivory Coast and Ghana are very good," the
group said, adding that estimate for the world production deficit in 2013-14 had
appeared to "slim down".
The combined ratio – the total value of cocoa powder and butter,
compared with the price of uncrushed beans, and a key indication of processing
margins – had stabilised late last year at 3.29.
While a rise in values of cocoa butter, used largely in making
chocolate bars, has tailed off, the market for powder, as used in the likes of
biscuits and ice cream, is showing signs of recovery.