Asian and North American cocoa grindings fell by 6.5% and 11.6% y-o-y, respectively, in Q2 of 2023, according to figures released by the National Confectioners Association and Cocoa Association of Asia on Thursday, 20th July. According to NCA figures, the total volume of cocoa grindings in North America has hit the lowest levels since Q1 of 2009 when figures were first published for the whole region. These drops come just weeks after the release of the European Q2 grindings figures, which surprised market participants to the downside, as grindings in Europe fell 5.7% y-o-y in Q2. For more information, see the previously published news story available here.
Industry participants have noted that the North American and Asian figures are well below expectations but have expressed some scepticism about whether the sharp drop will lead to a sustained easing of cocoa bean prices. Market participants interviewed by Mintec throughout July continue to report consumer demand for chocolate and cocoa products as being very stable, with one retailer saying that there had been “no surprises” in recent months. On Friday the 21st, following the publication of the Asian and North American Q2 grindings, several traders told Mintec that although the sharp decrease is larger than expected, they have not been surprised. One trader said: “We’ve been hearing about processors building stocks of [cocoa] butter and liquor for a while now, and I understand that there are ample stocks at this point, so if sales are relatively steady, I would have expected to see grindings drop as processors look to move more of the stocks they’ve already built up.” Another trader added: “we still have some concerns about crop quality in West Africa looking ahead to 2023/24, so we do not anticipate any large downward adjustments in bean prices for the foreseeable future. Actually, just this morning we have spoken to a few other people who expect the price to increase as [bean] supply becomes more limited [but] buyers may see some relief with falling butter and liquor ratios.”
Since the market open on Friday, 21st July, the London DEC-23 contract has risen by 1.7% as of the time of publication, and the New York DEC-23 contract has risen by 1.4%.
