Asias cocoa grind seen falling: Armajaro

Asias cocoa grind, a measure of demand for chocolates key ingredient, is expected to fall this year as consumers in Europe and the United States tighten their wallets amid the financial crisis, said Jasbir Singh, general manager for Armajaro KL.
"The grind is going to be negative. Basically all the cocoa products in the Asian region are dominated by sales to Europe or to the US," Singh told Reuters late on Friday, while attending the Cocoa Merchants Association of America International Cocoa Conference in Miami. "I would see more of a decline or a dormancy rather than any increase in further years," Singh said, referring to Asias Pacific region.
Singh, who is based in Kuala Lumpur, said Asia is not a big cocoa consumer. Forecasts for a downturn in global cocoa demand follow six years of growth. Macquarie Bank has projected a 1.8 percent drop in cocoa grindings and the International Cocoa Organisation has forecast that cocoa grindings will fall 2.1 percent in 2008/09.
Barry Callebaut, the worlds largest chocolate maker, has reduced cocoa grinding shifts at one Belgian factory. Chocolate exports from Germany, one of the worlds leading producers, were projected to fall around 30 percent in 2009 due to the global financial crisis and devaluation of many currencies, the German Cocoa Trade Association chairman said.
There was a lot of enthusiasm for cocoa production in Asia in the late 1970s and the 1980s, with Malaysia reaching its maximum production of around 250,000 tonnes in 1988/89. When Indonesian labourers working on Malaysian farms returned home they brought their expertise and Indonesia became the next big hope for cocoa production in Asia, with the country reaching an average annual production of around 400,000-450,000 tonnes.
Malaysia, Asias top cocoa grinder, now produces only around 26,000 tonnes, largely due to crop disease, Singh said. Indonesia is the worlds third biggest cocoa grower, next to Ivory Coast and Ghana. "I believe that Asia cannot be a replacement of any shortfall in production. I think it will remain at a dormant growth of between 500,000 to 650,000 metric tonnes because of diseases, climatic conditions and urbanisation," Singh said. Armajaro Trading is an 11-year-old physical commodity trading house headquartered in London.