* Increase in grindings due largely to activity in Indonesia (Adds details, quotes)
SINGAPORE, Oct 17 (Reuters) - Asia's cocoa grindings jumped12 percent to 161,097 tonnes in the third quarter from a yearbefore, according to data from the Cocoa Association of Asia(CAA) on Thursday, reflecting an increase in activity inIndonesia.
The CAA gave no details on the increase in the amount ofbeans processed by grinders in Singapore, Indonesia and Malaysiafrom 143,659 tonnes in the same period in 2012.
A jump in capacity in Indonesia was one factor althoughdealers also attributed the strong third-quarter grindings tonew members providing data to the CAA.
"I would say the increase is mainly due to the strongshipments of beans to Batam island," said a dealer in Singapore,referring to a new grinder owned by Malaysia's Guan Chong sited on the Indonesian island.
"It has the capacity of 80,000 tonnes a year," the dealersaid.
Increased grindings in Indonesia, the second-largest grinderin Asia, offset a decline in activity in Malaysia, the biggest.
Malaysian cocoa grindings dropped 3.1 percent inJuly-September from a year before to 71,150 tonnes, domesticdata showed on Monday, indicating processors had to cut capacityto bring down powder stocks.
Cocoa beans, when ground, yield roughly equal parts ofbutter and powder, which is used in cakes, biscuits and drinks.
The premiums for butter, which gives chocolate itsmelt-in-the-mouth texture, are now at their highest in sevenyears as chocolate makers stock up before the year-end festiveseason.
But some grinders have sharply cut the price of cocoa powderto spur demand. Although there have been several deals for cocoapowder in recent weeks, a drop in prices to $1,400 a tonne from$4,000 a tonne in January indicated grinders were struggling tosell the product. (Reporting by Lewa Pardomuan and Manolo Serapio Jr.; Editing byAlan Raybould)
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