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European cocoa grind set for recovery after 2012 slump – Rabobank

By Oliver Nieburg+

15-Jan-2013
Last updated the 15-Jan-2013 at 15:25 GMT

An analyst from Rabobank expects the European cocoa grind to pick up this year after data released today showed 2012 figures were the lowest in seven years.

Cocoa grinds, an indicator of demand for chocolate products, fell 6% in Europe during Q4 and were down 10% for the whole year compared to 2011, according to European Cocoa Association figures released today.

Grinding returns to origin countries

Keith Flury, senior commodity analyst at Rabobank told ConfectioneryNews.com: “There are two things going on: One is stagnant consumption of chocolate and the other is falling exports.”

He said that dwindling cocoa powder ratios has pressured profitability for grinders and added that part of the decline was due to capacity shifting back to cocoa origins in West Africa.

When Ivory Coast, the principal cocoa growing nation, was locked in civil war between 2002 and 2004 grinding moved to Europe, but capacity is now returning to the West African nation as the country stabilizes.

Grinds in some developed markets were therefore low. Germany experienced large declines with full year 2012 grinding down 16.55% to 377,258.3 tons.

Flury said the North American cocoa grind, to be released on Thursday, would also be pressured.

European Cocoa Grind (tons)

Q4 - 327,982 (-6%)
2012 - 1,290,520 (-10%)

Source: European Cocoa Association

Cocoa grind in emerging markets

However, he added that there would be growth in areas where chocolate consumption was rising.

The Malaysian grind, also released today, was 6.8% higher while Brazil had a record year with grinds up 2.4%.

Flury said he expected the Asian grind to be up and added that Barry Callebaut’s recent $950m acquisition of Singapore-based Petra Foods’ cocoa processing operations was evidence that the industry foresees growth in the emerging Asian market.

2013 outlook

Asked for his outlook for the year ahead, Flury said: “We have seen some profitability return and some factories startup.”

“What we expect is that we are going to see a modest increase in the 2013 season.”

“Globally we will see an increase of around 3%,” he said.

However, he said the EU and North America were only likely to see “modest growth”.

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