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Germans cautious over cocoa

19-May-2003

London cocoa prices hit a new 15-month low last week, encouraging many German buyers to pull out of the market in the hope that prices might fall further.

Germany's chocolate and confectionery industry, which had been making steady cocoa purchases just days before, appears determined now to get the most out of the current downward price trend.

 

"They came back and bought later in the week but not as strongly as before," a trader told a Reuters reporter.

 

The German confectionery industry has been rather cautious in recent months.

 

High cocoa prices and low German retail chocolate prices have squeezed manufacturers, and a supermarket price war has helped to decrease profit margins further.

 

Some supermarkets have put pressure on their chocolate suppliers to make even deeper prices cuts.

 

Such a move would probably make the German confectionery industry even more cautious about large-scale cocoa buying.

 

However, some analysts are optimistic that Germany will resume steady purchases of cocoa.

 

The production of Christmas chocolate products, which usually does not begin until the end of July, should see the large-scale acquisition of cocoa resume.

 

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