Europe's cocoa grind falls, sending futures lower

Cocoa futures eased after European cocoa processing volumes showed a surprise decline to the lowest in two years, with fears of a further drop in prices if statistics from other regions turn out weak.

Grindings in European cocoa processing plants fell 0.7% year on year to 307,938 tonnes in the April-to-June quarter, the European Cocoa Association said.

The figure was the lowest since the same quarter of 2012, and came in short of market expectations of a rise of 2-3% in volumes.

"A further slowdown had been expected, given the low processing margins, but grinding has nevertheless proved somewhat lower than envisaged," Commerzbank said.

Cocoa futures for September delivery stood 0.9% lower at $3,058 a tonne in New York at 07:45 local time (12.45 UK time).

London's September contract stood down 0.6% at £1,901 a tonne, falling earlier to £1,897 a tonne, its first foray below £1,900 a tonne in six weeks.

"The data was disappointing," a European soft commodities investor told

'One piece in the jigsaw'

Prices may be open to a further decline if upcoming data expected on Asia's cocoa grindings proves weak, the investor added.

"There is a question over how much of this decline is down to processors shifting activity from Europe to origin countries. The European data are only one piece in the jigsaw."

Groups such as Olam International are raising cocoa processing capacity in cocoa growing countries such as Ivory Coast and Indonesia, encouraged by growth in chocolate consumption in developing markets.

"When we see the Asian data, we will have more of an idea of what is going on," the investor said.

Processing margins

Processing volumes are also being curtailed worldwide by a weak market for cocoa powder, one of main products, with butter, from processing beans.

While margins from producing cocoa butter, a major ingredient of chocolate bars, remain strong, those from powder, used in ice cream and biscuits, are at their weakest in more than a decade, processor Barry Callebaut said last week.

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