Cocoa futures rallied, following stronger-than-expected European first-quarter grind data – although a leading broker cautioned against investors getting carried away.
European cocoa grind, which is the volume of beans being processed into butter and powder, fell by 1.6% year-on-year to 337,706 tonnes in the January-to-March period.
That represented the weakest start to a year, in volume terms, since 2010.
However, the figure beat analyst expectations for grind volumes to fall by 3-7%, undermined by squeezed margins for processors
Cocoa futures rallied on the news to one-month highs of $2,885 a tonne in New York, and £1,976 a tonne in London, for May delivery.
The data would appear to indicate a recovery in demand for cocoa products –the butter seen as giving solid chocolate a "melt in the mouth" texture, and the powder used largely in biscuits, ice-cream and drinks – and improved margins for processors after a difficult period.
The global chocolate confectionery market shrank 1.5% in the September-to-February period, according to analysis group Nielsen.
However, Jonathan Parkman, of head of agriculture at London broker Marex Spectron, said: "It would be folly to look at one are of the world's grinding and draw conclusions about processing margins globally."
Cocoa is a multinational industry, and grind demand in Europe could reflect international dynamics, rather than a shift in consumer demand.
"Europe consumes what it grinds, and gets the top-up from Asia," said Mr Parkman.
A clearer picture will only emerge after the release of further quarterly cocoa grind reports, with data on North America expected later on Thursday. A Reuters poll of analysts showed that the data expected to show volumes at best flat year on year and potentially down 5%.
"There were whispers on the market today that the grind might be weaker than consensus," Mr Parkman told Agrimoney.com.
On Wednesday the Malaysian cocoa board announced that cocoa grinds were down 27.5% in the first quarter of 2015, compared with the same period in 2014.
"We expect the rest of the Asian grind to not be quite so poor, but also sharply down," said Mr Parkman.
London cocoa for May stood at £1,964 a tonne in lunchtime deals, up 1.0% on the day, with New York cocoa for May up 2.2% at $2,878 a tonne.