Cocoa prices set a fresh two-year high in London after data showed a continuing recovery in Europe's processing volumes, confirming ideas of a revival in demand.
Cocoa processors including Archer Daniels Midland, Barry Callebaut and Nestle ground 331,514 tonnes of the bean in the July-to-September quarter, a rise of 4.7% year on year, the European Cocoa Association said.
The increase, within the range of 3-10% growth that analysts had predicted, underpinned ideas of firm demand for the bean which has, with concerns over flagging demand, fuelled a sharp revival in demand.
Cocoa futures have soared nearly 18% in London over the past three months, hitting £1,769 a tonne in early deals on Thursday, the highest since September 2011.
In New York, the spot contract has risen by 24% over the past three months, getting extra vim from a weakening in the dollar.
'On the road to recovery'
"Cocoa demand is still on the road to recovery," Commerzbank said, flagging the incentive to mills from a rising combined ratio – the value of cocoa butter and powder, produced by processing, compared with the price of the raw beans.
"Cocoa grinding is being given a boost by an increase in grinding margins due to the fact that cocoa butter and cocoa powder have recently risen in price more sharply than cocoa beans.
"Against this backdrop, cocoa prices remain well-supported."
Investors also have high hopes for North American cocoa grind data, due on October 17, which many believe could show stronger growth than the European figures.
The Cocoa Association of Asia is also due imminently to update the market on the Asian grind.
The European data took the region's total grind so far in 2013 to more than 981,000 tonnes, a rise of 1.9% year on year, putting volumes on track for a recovery after last year's weak data, undermined by a weak economy.
The cocoa grind fell by 10.3% in 2012, the weakest performance of any year since at least the 1990s.
In the latest quarter, the German grind rose 6.8% to 92,571 tonnes, the country's confectionery producers' association, BDSI, revealed separately on Thursday.
London cocoa for December stood at £1,765 a tonne at 11:00 local time, (06:00 New York time), up 0.7% on the year.
New York cocoa for December was 0.7% higher at $2,723 a tonne.