Asian Q3 cocoa grindings jump 12 pct yr/yr

* Increase in grindings due largely to activity in Indonesia (Adds details, quotes)

SINGAPORE, Oct 17 (Reuters) - Asia's cocoa grindings jumped 12 percent to 161,097 tonnes in the third quarter from a year before, according to data from the Cocoa Association of Asia (CAA) on Thursday, reflecting an increase in activity in Indonesia.

The CAA gave no details on the increase in the amount of beans processed by grinders in Singapore, Indonesia and Malaysia from 143,659 tonnes in the same period in 2012.

A jump in capacity in Indonesia was one factor although dealers also attributed the strong third-quarter grindings to new members providing data to the CAA.

"I would say the increase is mainly due to the strong shipments 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 dealer said.

Increased grindings in Indonesia, the second-largest grinder in Asia, offset a decline in activity in Malaysia, the biggest.

Malaysian cocoa grindings dropped 3.1 percent in July-September from a year before to 71,150 tonnes, domestic data showed on Monday, indicating processors had to cut capacity to bring down powder stocks.

Cocoa beans, when ground, yield roughly equal parts of butter and powder, which is used in cakes, biscuits and drinks.

The premiums for butter, which gives chocolate its melt-in-the-mouth texture, are now at their highest in seven years as chocolate makers stock up before the year-end festive season.

But some grinders have sharply cut the price of cocoa powder to spur demand. Although there have been several deals for cocoa powder in recent weeks, a drop in prices to $1,400 a tonne from $4,000 a tonne in January indicated grinders were struggling to sell the product. (Reporting by Lewa Pardomuan and Manolo Serapio Jr.; Editing by Alan Raybould)