The world just can’t get enough chocolate.
That’s become evident after all three main processing regions reported cocoa grindings, a proxy for demand, climbed in the third quarter from a year earlier. As margins surged, bean processing in Europe jumped 2.7% to the highest since 2011. In Asia, the measure rose 3.7%, while in North America the data surprised, posting a gain of 2.5% when traders had forecast a decline.
“These were very good, solid numbers,” said Jonathan Parkman, co-head of agriculture at Marex Spectron Group in London. “There’s no evidence global demand is slowing and the impressive trend from last year is continuing.”
The global chocolate confectionery market expanded 2.5% in the nine months through April, reversing a drop of 2.2% a year earlier, Barry Callebaut AG, the top cocoa processor, said in a July earnings presentation, citing data from analytics firm Nielsen. High demand for cocoa butter, a key ingredient in chocolate, and relatively cheap cocoa prices, have sent a measure of processing profitability to the highest in more than a decade.
North American processing was the highest for the quarter since 2014 and Asia’s the biggest in data going back to 2012, according to figures from the National Confectioners Association and the Cocoa Association of Asia compiled by Bloomberg. Globally, cocoa processing probably jumped 4% in the third quarter from a year earlier, Marex Spectron estimates. The figure also includes regions where grinding data isn’t publicly available.
“Every one of the published grinds were a little bit stronger than I thought,” Parkman said. “The reason why I was less optimistic about the grinds is because the base numbers had already jumped last year.”
Benchmark cocoa futures for December delivery jumped as much as 1.7% in London on Friday. In New York, prices rose as much as 1.8% to $2 183 a metric ton.
While demand remains strong, speculators are holding large bets on falling prices as bean deliveries to ports suggest a large crop.
“We have strong demand and good crops,” Parkman said.
© 2018 Bloomberg L.P