Cocoa powder was traded at as high as $5,200 a tonne in Asia, its highest in more than a month, as demand from chocolate makers picked up ahead of year-end festivals, dealers said on Friday. Powder produced by grinders in Malaysia and Singapore changed hands at $5,100 to $5,200 a tonne this week, while the same product from Indonesia was slightly cheaper at $5,000 a tonne, said dealers on the sidelines of a cocoa conference on the Indonesian resort island of Bali.
"I think people are worried powder prices will keep rising. That's why they are buying it. Overall demand for powder has increased." said a Kuala Lumpur-based dealer. When processing beans, grinders get butter and cake, which are later pressed into powder. Butter is the key ingredient for making chocolate and is also used to make spreads and soaps, while powder is used for coatings in chocolate-making, beverages and ice cream.
Steady demand for powder, especially by consumers across Asia, helped offset declines in buying interest for cocoa butter, which was blamed on high inventory of the product. Butter ratios were flat at 1.2 times London futures, with no signs of improvement, while the price of powder has gone up around 30 percent in the past year.
The strong demand for powder has also encouraged Indonesia, Asia's second-largest grinder after Malaysia, to expand production in the coming years. Chocolate flies 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.