NEW YORK: Price premiums offered for cocoa butter in the United States have soared to their highest levels since 2005 as "panic buying" of nearby supplies by chocolate makers has created a shortage through to the end of 2013, dealers said.
"You do get panic buying from some. There is a reason to freak out," said one dealer, adding that rising prices spur buying for fear of another increase the following day.
Chocolate makers are currently preparing for their busy Halloween and Christmas seasons.
A combination of growing chocolate demand and the need to replenish inventories after eating through a glut of cocoa butter in early 2012 has caused prices to shoot higher in recent months. Cocoa butter, which is extracted from the cocoa bean, gives chocolate its melt-in-the-mouth texture.
Ratio offers for butter supplies deliverable in October or November climbed to around 3.05 this week, or 3.05 times the ICE Futures US December cocoa contract, bringing its outright price to around $8,020 per tonne. This is the steepest ratio since July 2005, according to data from KnowledgeCharts, a unit of Commodities Risk Analysis.
Only a small amount of butter is believed to have traded at this high level, however, an industry source said.
In Asia, butter ratios jumped as much as 6 percent this week to around 2.68-2.70, a five-year high as desperate chocolatiers rushed to stock up ahead of the year-end festive season.
Cocoa Merchants' Association of America data shows the US ratio was at 2.7, or $7,010 per tonne, last week before the futures market rallied to a one-year high.
"The buying is coming from a number of directions: from people who are stocking up and making sure they don't run out, or (by those) having not bought enough before and seeing greater demand," the dealer said.
Blommer Chocolate Co, the biggest cocoa grinder in North America, has all three of its facilities operating at full capacity and is essentially sold out through the end of 2013.
The futures market was sharply lower in July 2005 when the ratio rose just above 3.0, making the cost of nearby butter supplies then around $4,400 per tonne, nearly half the current cost.
Comments
Comments are closed.