Cocoa prices edge higher, as EU data ease nerves

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 said.

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.

Malaysian retreat

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 quarter.

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.

'Capacity constraints'

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 constraints".

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 momentum".

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.

Agricultural Commodities
Agricultural Markets
Agricultural Companies
Agricultural Events