The European cocoa grind rose 6.0% in the last three months of 2015, despite a peak in bean prices.
The cocoa grind, the amount of cocoa beans being processed into butter and powder, is a proxy for demand.
European grinders processed 342,442 tonnes of beans over the three-month-period, data from the European Cocoa Association showed.
This is the highest rate of grinding since the start of 2014, and the sharpest year-on-year increase since the end of 2013.
West African supply
Carlos Mera, senior analyst at Rabobank, told Agrimoney the strength of the grind was “surprising,” but stressed that it did not give a complete picture of European demand.
Cocoa grinding in West Africa has been increasing, with the Ivory Coast outstripping the Netherlands as the world’s top cocoa grinder.
This means that European demand for cocoa powder and butter may be being met from West Africa.
On the other hand, a fall in the West African grind could increase processing in Europe, without any increase in consumer demand.
“It is harder and harder to read underlying consumption,” Mr Mera said. “This increase in grind might just be replacing West Africa.”
Mr Mera said that trade data from West Africa for the full three-month-period would be key to reading European demand.
German boom
And the boom in German cocoa grinding continued.
Germany’s fourth quarter 2015 cocoa grind rose 21.6% on the year, to 105,591 tonnes, the association of German confectionery producers BDSI said.
This leaves Germany’s full year 2015 cocoa grind rose 10.5% on the year, at 393,421 tonnes, over a period when European grinding as a whole only increased by 1.7%.
Falling prices
The high rate of processing came despite a period of high cocoa prices.
In November of 2015, front-month London cocoa futures hit a 4-year high, at £3,422 a tonne.
Since then prices have undergone a sharp downward adjustment, hitting an 8-month low of £2,844 a tonne on Thursday.
The sharp downward correction from the start of 2016 may bode well for cocoa grindings over the current three-month-period.
Overdue correction
“This drop in prices was long due,” Mr Mera said.
“We are expecting El Nino to fade,” said, referring to the weather phenomenon that can cause dry weather in West Africa, the world’s key cocoa growing region.
“Production for 2016-2017 should be up, Mr Mera said, with supply forecast to outstrip demand by 93,000 tonnes, the largest surplus in 6 years.
London cocoa prices rose 1.1% to trade at £2,888 a tonne in morning deals in London.
