Asian cocoa grind defies slowing Chinese economy
Traders surveyed by Bloomberg had expected a decrease in Asian cocoa grinds as the slowing Chinese economy looked set to take its toll on demand for chocolate.
Japan growth cancels out Chinese slowdown
Francisco Redruello, senior analyst for food at Euromonitor told ConfectioneryNews: “China has been the driver for chocolate demand in Asia in the last two to three years. Traders were concerned by the economic situation in China."
The country’s GDP grew just 7.5% in Q2, a large drop on previous quarters.
However, figures released from the Cocoa Association of Asia yesterday showed that cocoa processing in Asia rose 2% year-on-year in Q2 to 153,792 metric tons (MT).
“Chocolate demand has been strong but not massively compared to last year. It’s quite a stable market for the time being,” said Redruello.
He said the Japanese economy had grown significantly during the quarter and had bolstered demand for chocolate in the region.
Manufacturers swap volume for value
The analyst added that manufacturers in Asia were starting to shift from focusing purely on increased chocolate volumes to adding value to products through fillings and inclusions to get premiums from wealthier consumers.
“The more mature a market becomes the more manufacturers focus on adding value.”
The trend appears to be unfolding in Malaysia where the cocoa grind fell in spite of consecutive years of growth in the domestic chocolate market.
The Asia grind data comes shortly after the European Cocoa Association announced Q2 European grindings grew 6.1% to 310,408 MT. See HERE.
Cocoa price outlook
According to Redruello, improved Q2 cocoa grindings will not make a huge difference to prices and manufacturers needn’t fear significant price hikes in the next few months.
ICE futures yesterday stood at $2,303 per MT while Liffe futures were pegged at £1,572 per MT.
Redruello said there were still cocoa stocks from previous seasons for the market to absorb in spite of a forecasted 45,000 MT production deficit for the current crop year.