Cocoa futures hit fresh 2016 highs, after Asian grinders reported higher-than-expected volumes.
Asian cocoa grinding was up 2.9% in the first three months to 2016, compared to the same time last year, according to data from the Cocoa Association of Asia (CAA).
Grinding, which is treated as a proxy for consumer demand, came in at at 148,911 tonnes.
This was better than market expectations, which pointed to an increase of around 1%.
No drop in Indonesia
Malaysia, Asia’s second-largest cocoa processor, had already reported an increase in grind of 4%.
But markets were uncertain whether that increase represented a real uptick in demand, or simply a shifting of volumes away from Indonesia, the top-ranked grinder.
Friday’s data release makes it clear that Indonesia also saw rising volumes.
But Carlos Mera, senior analyst at Rabobank, noted the move was “more a stabilisation rather than a huge growth story”
“There is some recovery in Asian grinding,” he said, “but it’s not a huge”.
Still, he saw the figure as supportive, and indeed cocoa futures moved higher on the news.
July cocoa futures in New York were up 1.4% in morning deals, at 3,151 a tonne, their highest level since the start of the year.
In early afternoon deals in London, July cocoa futures were up 1.0%, at £2,285 a tonne, their highest level since mid-December.
Ivory Coast fuels rally
Cocoa futures have rallied some 10% since early April.
Mr Mera ascribed the move primarily to “disappointing” cocoa arrivals in the Ivory Coast.
“They were at the same pace of the previous year in January,” he said. “Now they are 7% down year on year.”
Markets are looking at what’s going to happen to arrivals,” he said. “Are they going to keep decelerating or are they going to stabilise?”
(Source – http://www.agrimoney.com/news/cocoa-price-hits-2016-high-as-asian-grind-rises—9522.html)