Cocoa butter ratios, a key indicator of demand, held steady at 1.0 times London futures on Thursday and were likely to stay at the current level next week on the back of sporadic demand from chocolate makers, dealers said. Renewed concerns over bean supply could also support the butter market ahead of the summer lull. Demand from chocolate makers normally slows to a trickle from July after boosting production during the holiday season from December through April.
World 2011/12 cocoa output is expected to fall 71,000 tonnes short of grindings after a record surplus of 347,000 tonnes in the previous crop year, according to the International Cocoa Organisation. "There are some deals for butter, but in very small volumes. We are quoting powder at $3,900 to $4,000 a tonne, which is basically unchanged from last week," said a dealer in Singapore. "The demand for powder is not as good as we have expected, but it's not so bad either. Buying interest is basically from Asia."
Ratios for butter, a key ingredient for making chocolates, fell to four-month lows at 0.98 times London futures in late April because of ample supply, but they began to stabilise again this month. Cocoa beans are ground into butter and cake, which is then processed into powder and used for coatings in chocolate making, beverages and ice cream. Other dealers offered powder at $4,200 to $4,500 a tonne, steady from last week.
Cocoa butter prices are determined by multiplying the ratio with related contracts in London, July cocoa futures on Liffe rose 32 pounds to settle at 1,541 pounds a tonne on Wednesday. Chocolate sales normally surge in the main consuming regions of Europe and North America during the key holidays of Christmas, Valentine's Day in mid-February and Easter, which fell early in April.
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