Cocoa grinding in Asia probably declined 5 per cent in the third quarter as higher prices squeezed profit margins for confectionery makers.
Processing fell to 144,061 metric tons in the three months ended 30 September from 151,643 tons a year ago, according to the median of eight analyst and trader estimates in a Bloomberg survey. That would be the lowest for the July-September quarter since 2012, Cocoa Association of Asia data on its website show. Forecasts ranged from declines of four per cent to seven per cent. The group will release data 23 October, with figures from Indonesia, Malaysia and Singapore.
The commodity is heading for its fourth annual gain as output in Ghana, the second-biggest producer, fell amid concern El Nino threatens crops. Prices may rise to $3,150 a ton in the fourth quarter due to dryness in West Africa and Indonesia, Rabobank International said last month. Grinding in North America declined for a fourth quarter, extending the longest slump since 2009, the National Confectioners Association said last week.
“Margins for semi-finished processors are absolutely dismal,” said Jonathan Parkman, co-head of agriculture at Marex Spectron Group, a broker in London. “For most of the third quarter and most of this year, the margins available to processors have been absolutely shocking.”
The “enormous overcapacity” of cocoa bean processing has placed huge pressure on margins, Parkman said. Demand in the region has also been disappointing, he added.
“Confectionery prices have been raised throughout the world because of high prices of cocoa butter and cocoa beans, and that has impacted the Asian market, which is a very price-sensitive market,” said Parkman.
Bloomberg News, edited by ESM
