(Jan 16): Cocoa futures fell to a two-year low in London after Europe’s cocoa processing posted a steeper-than-expected slump, showing the extent of demand destruction as the industry reels from the lingering impact of record prices.
Europe is the world’s top consuming region, making its grindings a key focus of the global market. The amount of beans ground into butter fell to 304,470 tonnes in the fourth quarter (4Q), an 8.3% drop from a year earlier, according to figures released on Thursday by the European Cocoa Association. That’s the lowest for any quarter in data going back to 2013.
The most-active contract fell as much as 4.4% to £3,572 a tonne, the lowest since January 2024, before paring some losses. Cocoa in New York slumped as much as 4.9%.
New York futures hit an all-time high in December 2024 following poor harvests in West Africa. The price shock prompted consumers to cut back on chocolate, and candy makers changed recipes to use cheaper substitutes and include more fillers like nuts. While futures have more than halved from the peak, they remain historically expensive and processors are still working through beans bought at much higher levels.
“The lower than expected grinding in Europe is bearish and expected to further pressure cocoa prices,” said Gnanasekar Thiagarajan, head of trading and hedging strategies at Kaleesuwari Intercontinental.
The weak figures suggest product reformulations have taken a significant toll on global demand, dimming prospects for a recovery in grindings this year, according to Andrew Moriarty, senior cocoa manager at Expana.
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There was slightly more upbeat news from Malaysia, where processing dropped 6.8% from a year earlier in 4Q. Processing was up a third from the July-September period, the Malaysian Cocoa Board and Cocoa Manufacturers Group said on Thursday, but down 20% for the full year compared with 2024.
“Malaysia’s milder drop is better than expectations and suggests that demand pressure is easing in Asia, keeping market sentiment cautious but supported rather than outright bearish,” said Nisha Kumari, an analyst with Tropical General Investments Group.
Figures on North America grinds are to be released later on Thursday. The Cocoa Association of Asia is due to release the region’s quarterly grinding figures on Friday.
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Prices:
- Cocoa futures fell 1.6% to US$5,009 a tonne as of 10.37am in New York. London cocoa was down 1.8%
- Raw sugar retreated 0.6% in New York
Uploaded by Felyx Teoh
