by Agrimoney.com
Cocoa futures struggled after the quarterly reporting season for grindings got off to a mediocre start, with a rise in European volumes coming in at the low end of expectations, and Malaysia's tonnage falling.
The cocoa grind in Malaysia, Asia's top processor of the beans, came in at 72,191 tonnes in the April-to-June quarter, down 3.1% year on year, the Malaysian Cocoa Board said.
The decline was attributed by many observers to tighter supplies of beans from Indonesia for processing, although coming at a time of growing concerns over Asia's economy, the data raised demand questions too.
"I'm not convinced supplies weren't there to process if demand had been buoyant enough," one London soft commodities trader told Agrimoney.com.
Disappointing increase
The data came shortly after the European Cocoa Association revealed a 6.1% rise in the western European cocoa grind for the same quarter.
This represented the first year-on-year increase in volumes since late 2011, and was the strongest rise in nearly two years.
However, many investors were disappointed the increase was not larger, given comparison with a particularly weak April-to-June quarter in 2012.
Analysts had expected a rise of 4-10%, according to a Reuters poll, with a Bloomberg poll coming in with a figure of 8.3%.
'Not exciting'
The figure follows talk of disappointing margins among processors, which are gaining firm prices for cocoa butter – the processing product used in making chocolate – but with prices of powder, as employed by bakers and ice cream makers, soft.
"A figure of 6.1% was nothing to get too excited about, especially when cocoa prices have already recovered over the last few weeks," the trader said.
In London, cocoa futures for September, which closed flat at £1,545 a tonne on Monday, have bounced 8.8% from a late-June low.
New York cocoa futures for September, which closed down 0.7% at $2,221 a tonne, have shown a smaller rise, of some 4%, with gains constrained by a stronger dollar.
Prices have been boosted by concerns that dry weather in Ivory Coast and Ghana, the top two procuring countries, will delay the start of the main crop harvest, which starts in October.
Furthermore, "flows to the market from the midcrop have been slow due to unsatisfactory sizes and quality of the beans", Macquarie said.
The North American Confectioners Associations will reveal regional quarterly grinding data on Thursday July 18.
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