The European third quarter (Q3) cocoa grind has slumped 16% on the same period last year, but the statistics do not necessarily mean demand for chocolate is waning, according to an analyst.
Figures released today put the European cocoa grind in Q3 at 316,676 tons - the lowest for seven years.
Grind statistics are often used as an indicator of demand for chocolate products.
Analyst: Demand for chocolate flat
Keith Flury, senior commodity analyst at Rabobank International, told ConfectioneryNews.com: “Low grinding margins due to a building of product inventories at the start of the season, as well as capacity shifting to Asia and west Africa, are likely responsible for the decline.”
Accordingly Flury said that the figures do not necessarily mean demand for chocolate in Europe has fallen. Demand is likelier to be flat or only modestly lower, he said.
Capacity shift to Asia and Africa
“Grinding margins have been low everywhere and we would expect North American and Asian grindings to also be lower,” he said.
“Given the shift of capacity utilization out of Europe the figures will not be down by as much,” he continued.
North American Q3 grind stats will be released on Thursday 18 October with figures for Asia expected shortly afterwards.
The German confectionery association (BDSI ) reported a decline of 32% in the German cocoa grind to 86,708 tons in Q3, but said this was due in part to a revised survey basis.
Outlook for Europe
This year’s total European cocoa grind is forecast to reach 1,312,294 tons, which will be down 9% compared to last year, but will still be higher than levels at the height of the global recession in 2009.
“Q4 outlook is better as product ratios have improved and profitability is higher,” said Flury
“Europe will like never realize the same figures of Q3 2011 again, but usage and demand outlook is positive relative to the Q3 2012 figures,” he continued.
London cocoa futures currently stand at £1532 per ton, while New York futures are pegged at $2,385 per ton.
Prices are lower than last year. The average monthly price for October 2011 was $2680 per ton.