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Cocoa butter in the European market is 1.25 to 1.3 times higher than the NYSE Liffe price, according to three traders with direct knowledge of the sales.
The traders declined to be identified because they are not authorized to speak to media. Cocoa butter, which accounts for as much as 20 percent of the weight of a chocolate bar, was 1.2 to 1.3 times the exchange price last week. On May 25, it was 1.06, according to Commodities Risk Analysis LC.
A global glut of cocoa butter emerged after demand for the by-product of bean processing fell following the global economic recession of 2008-09, according to London-based broker Marex Spectron Group. Cocoa butter is needed to make chocolate. Cocoa powder that is also derived from beans was more in demand because of its use in ice cream, drinks and cookies in Asia. That exacerbated the cocoa butter glut.
“Processors have been drawing down existing cocoa butter stocks, rather than grinding fresh cocoa beans and selling them at cheap prices, rather than focusing on just powder,” Kona Haque, an analyst at Macquarie Group Ltd. in London, said in a report dated yesterday.
Cocoa butter trades in Europe in liquid form at a ratio to the NYSE Liffe bean price. Cocoa futures for December delivery increased 0.9 percent to 1,581 pounds ($2,488) a ton at 1:30 p.m. in London.
To contact the reporter on this story: Isis Almeida in London at Ialmeida3@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at Ccarpenter2@bloomberg.net.