Cocoa processing in Malaysia fell 13.7 percent from a year earlier to 61,428 tonnes in the third quarter, the Malaysian Cocoa Board said on Tuesday, reflecting slow demand and rising costs. Cocoa grinding, an indicator of demand for chocolate's main ingredient, was also down 5.6 percent from the previous quarter, the agency said, without giving further details. Malaysia is Asia's biggest cocoa grinder.
"It's a combination of too much capacity in the market, falling product prices and high raw material cost which are driving people to reduce their inventory," said a cocoa trader in Singapore. "It's no surprise that the grind is falling." When ground, cocoa beans yield roughly equal parts butter and power. Butter gives chocolates their melt-in-the-mouth texture, and powder is used in cakes, biscuits and drinks. Manufacturers in Asia are trying to cut their inventory of cocoa powder, which should keep grinding numbers declining, the trader said. Cocoa bean prices have risen more than 15 percent this year, hitting $3,399 per tonne on September 25, its highest since 2011.
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