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Supply Chain

Asia Cocoa Grindings Climb As Dismal African Crop Boosts Demand

By Steve Wynne-Jones
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Asia Cocoa Grindings Climb As Dismal African Crop Boosts Demand

Cocoa processing in Asia rose 2.8 percent in the second quarter as a smaller West African harvest spurred grindings of the chocolate ingredient in other regions.

Processing rose to 146,353 metric tons in the three months ended June 30 from 142,325 tons a year earlier, the Singapore-based Cocoa Association of Asia said in a statement on Friday. That was below the median estimate of 148,730 tons in a Bloomberg survey. The official data comprises figures from Malaysia, Singapore and Indonesia.

Cocoa futures have jumped 7.1 percent this year in London partly as dry weather damaged beans in West Africa, the world’s largest producing region. Grindings in Asia may weaken in future as bean supplies dwindle, according to Edward George, head of research at Ecobank Transnational Inc. Grinders in Indonesia may struggle to secure enough beans as cocoa faces competition from crops like palm oil and coffee, he said.

“Going forward, we expect Southeast Asia to remain very important, but the big question is where they can source the beans from,” George said by phone from London Friday. “They’re just not producing enough beans.”

Bean Quality

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In Europe, the world’s biggest cocoa consuming region, processing climbed a bigger-than-expected 4.9 percent to a five-year high of 324,968 tons, Brussels-based European Cocoa Association said on July 12. Processing in North America recorded its first year-on-year increase since 2014 in the second quarter, the National Confectioners Association in Washington said July 15.

“It partly reflects the fact that there’s a lot less cocoa in Africa this year,” George said. “Bean quality is down in both Ghana and Cote d’Ivoire. Because of this, they’re grinding less cocoa in West Africa so they need to grind it elsewhere.”

Higher grindings still may not reflect stronger demand. Global chocolate sales fell 2 percent in the nine months through May, Barry Callebaut AG, the world’s top cocoa processor, said July 7, citing figures from Nielsen.

News by Bloomberg, edited by ESM. To subscribe to ESM: The European Supermarket Magazine, click here.

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