Bloomberg News

Cocoa Falls on Europe’s Bean Processing; Sugar Drops

January 16, 2013

Cocoa fell in London after European bean processing in the fourth quarter dropped to the lowest in seven years. Sugar also slid.

Bean grindings declined 6.2 percent to 327,982 metric tons in the period, according to the Brussels-based European Cocoa Association. That was the lowest amount for the three-month period since 2005. The median in a Bloomberg survey of 12 traders, grinders and brokers on Jan. 4 suggested processing would fall 4 percent. Grindings dropped as some processors, including Delfi Cocoa (Europe) GmbH, slowed factory rates.

“The ECA numbers are the lower end of expectations, but they weren’t bad considering Delfi was grinding less in the period,” Jonathan Parkman, co-head of agriculture at brokerage Marex Spectron Group in London, said today by phone. “So it’s only slightly negative to the market.”

Cocoa for March delivery was down 0.5 percent to 1,444 pounds ($2,322) a ton by 10:14 a.m. on NYSE Liffe in London. It gained 0.9 percent yesterday. Cocoa for March delivery fell 0.5 percent to $2,255 a ton on ICE Futures U.S. in New York.

Cocoa pressing in Europe fell 18 percent in the second quarter and 16 percent in the third, ECA data showed. Some grinders curbed bean-pressing early last year after a drop in demand for by-product cocoa powder reduced their profitability.

“Looking at Europe alone can be misleading,” Parkman said. “When you add up all the other regions where beans are processed, the drop in the fourth quarter we estimate will be about 2 to 3 percent.”

Rising Profitability

Factories started ramping up rates again. Delfi is increasing processing at its Hamburg plant after a six-month slowdown, Karel Menu, the company’s managing director, said on Jan. 7. Cargill Inc. has started to increase grindings after slowing down earlier last year, Jos de Loor, president of the cocoa and chocolate unit, said on Nov. 21.

“The grinds will be spectacular by the time we get to the second and third quarters because the base comparison will be very low,” Parkman said. “I expect to see double-digit increases by then. The first quarter should already be positive.”

White, or refined, sugar for March delivery slid 0.5 percent to $505 a ton on NYSE Liffe. Raw sugar for March delivery retreated 0.6 percent to 18.79 cents a pound on ICE.

Robusta for March delivery was 0.6 percent down to $1,960 a ton in London. Arabica coffee for March delivery slid 0.6 percent to $1.524 a pound in New York.

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.


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