Asia Cocoa-Market flat, set to remain weak in 2015 -traders

JB Foods

08/12/2014 13:24

* Butter ratios at 17-month low 
    * Big powder stocks to weigh on prices for a year -trader 
    * Indonesia's cocoa bean export tax ups pressure on grinders 
    * Powder trading at $1,700 to $1,900 per tonne 
 
    By Fergus Jensen 
    JAKARTA, Dec 8 (Reuters) - Asia's cocoa market has been flat 
for the past week and is expected to remain depressed throughout 
2015, traders said, as butter ratios hovered at 17-month lows 
and powder prices were weighed down by bulging grinder 
stockpiles. 
    Physical stocks of powder - used in cakes, biscuits and 
drinks - were still high, a Singapore based trader said, pushing 
prices back down to between $1,700 and $1,900 a tonne, from 
between $1,800 to $1,900 two weeks ago.  COC/AS   
    "The market is flat because there is a lack of market 
participants," the trader told Reuters. "There is no hurry to 
trade. People are still finding it hard to sell."     
    Higher-grade powder was selling for between $2,300 to $2,400 
at tonne, the trader said. "It's not very exciting for 
grinders." 
    When ground, cocoa beans yield roughly equal parts of butter 
and powder. Grinders do not reveal the size of their butter or 
powder stocks. 
    Demand for cocoa butter, which gives chocolate its 
melt-in-the-mouth texture, was steady, the trader said, as 
global chocolate consumption has grown 1-2 percent this year.  
    Butter ratios, a key indicator of demand, were quoted at 
between 2.07 and 2.1 times London futures  0#LCC: , their lowest 
level since July 2013.  COCOA/ASIA1  
    Grinders were now holding between four and six months of 
powder stocks, a high level compared with several years ago when 
they only held one month's worth, the trader said.  
    Despite the recent growth in grinding capacity in Asia, 
actual cocoa grinding had slowed over the last two quarters, the 
trader said.  
    Cocoa grinding, which reflects demand for chocolate's key 
ingredient, dropped to 151,643 tonnes in July-September from 
161,805 tonnes in April-June, according to the Cocoa Association 
of Asia.  ID:nL3N0SI3GY  
    "Powder stocks are actually coming down, but not fast 
enough. You need another year, probably, for it to come down to 
a level where everyone is comfortable," the trader. 
    The coming year is expected to be difficult for the grinding 
industry as pressure to reduce output will mean higher costs per 
tonne, another trader said. 
    "You need a lot of cash flow to weather this next year. Even 
if you are grinding less you still might have a monthly build-up 
of powder stocks." 
    Indonesia's cocoa bean export tax, unchanged at 10 percent 
this month, is also comparatively high for the quality of beans 
offered and is having a dampening effect on trade and the 
industry, a second trader said.  ID:nL3N0TI1YZ  
    Exports of cocoa beans from Indonesia's main growing island 
of Sulawesi plunged 69 percent to 1,892.19 tonnes in November, 
from 6,038.32 tonnes a year earlier, industry data showed last 
week.  ID:nL3N0TL1XC  
    Indonesia is the world's third-biggest cocoa bean producer. 
Output from the world's top two producers may struggle to 
rebound from a sluggish start to the season, as several bumper 
cocoa crops have left trees in Ivory Coast and Ghana fatigued. 
 ID:nL6N0TO412  
 
 (Reporting by Fergus Jensen; Editing by Pravin Char) 
 ((fergus.jensen@thomsonreuters.com; +62 21 2992 7604; Reuters 
Messaging: fergus.jensen.thomsonreuters.com@reuters.net)) 
 
Keywords: COCOA PHYSICALS/