Q3 cocoa grind in Europe

Netherlands may overtake Côte d'Ivoire as leading cocoa processor

By Oliver Nieburg

- Last updated on GMT

European Q3 cocoa grind up 3% as processors shift capacity from West Africa to Europe. ©iStock/spinetta
European Q3 cocoa grind up 3% as processors shift capacity from West Africa to Europe. ©iStock/spinetta

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The Netherlands is expected to have overtaken Côte d'Ivoire as the leading cocoa processor for the 2015/16 cocoa season, as Europe's cocoa grind reaches a five-year high.

Cocoa processed in Europe has risen in the third quarter (Q3) to reach its highest level Q3 level since 2011 as companies shift capacity from Côte d'Ivoire to Europe.

Europe's Q3 cocoa grind rose 2.9% compared to the same period last year to 343,935 metric tons (MT), according to data from the European Cocoa Association (ECA).

The figures, published yesterday by the ECA, compiled cocoa processing statistics from 21 companies such as Cargill, Barry Callebaut, Ferrero, Mars and Nestlé across the European Union-15 and Switzerland from July to September 2016.

Ivorian cocoa quality

Laurent Pipitone, director of the International Cocoa Organization's (ICCO) economic division, told ConfectioneryNews, that global grindings for the cocoa year, which ended on September 30, 2016, were up 0.2%, below the annual long-term trend of +2.5%.

However, there were strong regional disparities in 2015/16, with relatively strong increases in Europe and Asia, while processing has been shrinking in Africa,”​ he said.

The main reason behind this development was the strong decline of cocoa bean availability in Côte d’Ivoire, the world largest cocoa producing country (40%) and also a country which became the world largest cocoa bean processor last year (with a share of 13%),"​ he continued.

He said the country's modest crop for the season – 1.57m MT, down 226,000 MT, had been driven by dry weather and severe Harmattan conditions.

This has also led to lower bean quality (smaller beans), less profitable to process,” ​he said.

Consequently, many international cocoa processing companies, with operations on several continents, decided to increase their activity in Europe, drawing on existing bean stocks, and reducing their activity in Côte d’Ivoire,”​ said the economic director.

Netherlands to become the top cocoa processor

The ICCO expects the Netherlands will be recognized as the world's leading cocoa processor for the 2015/16 season, but anticipates Côte d’Ivoire will reclaim its crown in the current season.

German confectionery association BDSI reported a 1% rise in cocoa processing in Germany in Q3 to 102,273 (MT).

The 2016 calendar year cocoa grind in Europe is set to be 1.7% greater than last year, based on the ECA's moving average.

Price outlook: Rabobank

According to Rabobank's latest Agri Commodities report, published two weeks ago, cocoa prices have recently dropped around $100 per MT in the main producing nation Côte d'Ivoire as local exporters have been required to show the regulator, Conseil Café-Cacao, a short futures contract or a physical sales contract.

It expects cocoa prices will reach £2,220 per MT on the ICE London futures market and $2,820 on the New York market by Q3 2017. Averages Q3 prices in 2016 stood at £2,961 per MT in London and $2,377 per MT in New York, according to the bank.

We remain very optimistic about increased cocoa supplies from liberalized markets, particularly from Latin America,”​ it said in its report, noting investments in Ecuador and Colombia.

The bank said grindings were expected to decline at origin in West Africa, while it expects full year grinds globally will be fairly stagnant.

The National Confectioners Association is expected to publish North America cocoa grind numbers on October, 20.

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