Cocoa butter prices eased in Asia as chocolate makers have finished stocking up for the Easter holiday, dealers said on Friday, while heavy rain in Indonesia's main cocoa-growing areas of Sulawesi is likely to push back the start of its main harvest to end-April.
Malaysian and Indonesian grinders offered cocoa butter at 1.30 times against London futures, the lowest since mid-November and down from 1.35-1.45 times in early March as chocolate makers have enough butter stock to meet Easter demand. "Butter ratios went down despite Ivory Coast's export ban, which many think will cause a shortage. It simply shows how weak the butter market is," said a regional dealer in Singapore. Butter prices are determined by applying a ratio to related contracts in London. The butter and London futures markets typically move in opposite directions.
Demand for butter - the main ingredient for making chocolate - was now in a lull as buyers are unlikely to buy in quantity until August/September, ahead of the Halloween, Thanksgiving and Christmas holidays, the dealer said. ICE cocoa futures prices have fallen by one-fifth since hitting a 32-year high at $3,775 per tonne a month ago as armed conflict in top producer Ivory Coast may be drawing to an end, meaning a ban on the country's cocoa exports could be lifted.
ICE July cocoa finished down $12 at $3,002 a tonne on Thursday. Chocolates fly off the shelves in the main consuming regions of Europe and North America during Christmas at the end of the year, Valentine's Day in February, Easter in the spring and other holidays.
Prices for cocoa powder were steady at $4,700-$5,000 a tonne even though stocking for Easter has finished, as grinders tried to keep prices up to compensate for weak butter ratios. As for beans, heavy rain in Sulawesi island is likely to delay the main harvest, which normally starts in the first week of April.
"It has been raining heavily in the past few weeks in South and Central Sulawesi. There is a chance of pods falling from trees and black pods appearing," said an Indonesian dealer in Makassar, one of Indonesia's key ports for cocoa exports on Sulawesi island. "We expect the main harvest to be delayed until the end of April," he said.
Arrivals of cocoa beans from plantations to Makassar have been thin at about 500 tonnes a week, half the normal level at the start of the main harvest. Trading was also sluggish as buyers preferred to hold back shipments for now because of a rise in export tax in April, dealers said.
The trade ministry has raised the export tax on cocoa beans to 15 percent in April from 10 percent in March and set the base export price - used to calculate the tax - at $3,203 a tonne, which means exporters must pay $480.45 a tonne in tax compared to $320.00 in March. "Big buyers like the United States will wait until next month.
If the tax remains the same, they will have no choice but to buy beans to keep their factories running," said the Makassar dealer Sulawesi fair-average beans were offered at a discount of $500 a tonne for prompt shipment under ICE July cocoa, widened from $440-$450 a tonne in March after the increase in the export tax.