Asia Cocoa-Butter ratios stay near 7-year peak, powder dips

Reuters

* Butter ratios at 2.80 times London for this year'sdelivery

* Powder offered as low as $1,300/T

* Dealers digest Q3 Asian grindings data

By Lewa Pardomuan

SINGAPORE, Oct 18 (Reuters) - Cocoa butter ratios hoveredthis week around levels last hit in 2006 but trading activityslowed down in Asia after recent purchases from chocolatemakers, while a dip in powder prices spurred mild buying,dealers said on Friday.

Cocoa beans, when ground, yield roughly equal parts ofbutter and powder, which is used in cakes, biscuits and drinks.The price of butter, which gives chocolate its melt-in-the-mouthtexture, is set by multiplying the ratio with relevantcontracts in London and New York futures.

Butter ratios for this year's delivery were unchanged fromlast week at 2.80 times London futures, but the values forshipments in the first quarter of next year were slightly lowerat 2.70 times. (CCMYID-BUT-P1).

Butter ratios have been firm around seven-year highs overthe past week due to demand from chocolate makers. Chocolatesales normally surge in the main consumer regions of Europe andNorth America during Christmas, Valentine's Day and Easter.

Cocoa powder was offered as low as $1,300 a tonne, down from$1,400 last week and $4,000 a tonne in January, with dealersreporting some deals to consumers in Asia. Powder demand hasbeen subdued as chocolate and beverage makers, who are awarestocks are ample, wait for cheaper prices.

"There are people who come to buy powder, but I don't seeopportunistic buyers," said a dealer in Singapore, referring toconsumers who normally buy on dips.

A sharp increase in Asian grindings in the third quarter ofthis year failed to stir up the market because the numberslooked artificially high, said dealers. Grinding is a keyindicator of demand for chocolate's ingredients.

"CAA Q3 grindings are indeed up by 12 percent because thereare more reporting members this quarter compared to last year,"said another dealer in Singapore, referring Thursday's dataissued by the Cocoa Association of Asia (CAA).

"But in my view, total grindings this year will be up byabout 2 to 3 percent."

Grinders in Singapore, Indonesia and Malaysia processed161,097 tonnes of cocoa beans in the third quarter, comparedwith 143,659 tonnes in the same period in 2012, according to theCAA.

The CAA gave no details on the increase, but some dealersattributed the strong third-quarter grindings to new membersproviding data to the CAA and a jump in capacity in Indonesia.

Grindings in Malaysia, which is Asia's largest, dropped 3.1percent in July-September from a year before to 71,150 tonnes,domestic data showed on Monday, indicating processors had to cutcapacity to bring down powder stocks.

The drop in grindings could also be due to grinders beingsaddled with substandard supply after processing African beansthat developed a high acid content on the long journey to Asia,some dealers said. Butter with high acidity has to be treatedbefore they can be sold to consumers.

"They had to cut down production because they had acidicbutter stuck in their tanks," said the second Singapore dealer.

NEXT WEEK

Butter ratios could stay at the current level next week, butgrinders may cut the price of powder further to attract demand. (Editing by Muralikumar Anantharaman)

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