Under-pressure cocoa prices staged some recovery after industry data
showed European consumption of the bean declining sharply, but less drastically than some
investors had feared.
European cocoa processors ground 316,676 tonnes of the bean
in the July-to-September period, a 16.2% slide year on year, and the lowest figure for
the quarter since 2005 the European Cocoa Association said.
However, the decline was at the lower end of the range of 15-20%
that analysts were expecting, and reflected a sharp improvement on the 292,551
tonnes ground in the April-to June quarter, representing the biggest decline on
records going back 12 years.
"You can't call the data promising but it was at least not
as dismal as some had prepared for," a London trader told Agrimoney.com.
"People have got used to setbacks on the demand front."
Prices recover - for now
Cocoa futures for December added 1.4% to £1,535 a tonne in morning
deals in London, recovering from a near-three-month low set in the last
session, when prices were 13% below an early-September high.
However, Commerzbank analysts cautioned against expectations of the rebound in prices extending too far.
economic crisis in the eurozone is leaving a noticeable mark on cocoa demand," the bank said.
With Europe such an important area for cocoa consumer, "global
cocoa demand is hardly likely to increase unless there is a recovery in Europe.
"We see only limited upside potential for cocoa prices."
Running down stocks
The volume decline reflects in part a one-off hit as processors
reverse last year's shift in grinding activity to Europe from Ivory Coast, the
top cocoa bean producer, which was rocked in 2011 by civil unrest.
However, the drop has been accelerated by stagnant chocolate
demand in Europe, which has dented margins and prompted processors, besides
mothballing some capacity, to run down hefty inventories of cocoa products
rather than needing to grind further beans.
Data released independently by BDSI, the German
confectionery producers' group, showed the country's grind falling by 30% to 86,708
tonnes in the latest quarter.
The European Cocoa Association data is drawn from the 15 original EU countries, including Germany, plus Switzerland, from processors including Archer Daniels Midland, Barry Callebaut and Delfi.