Europe cocoa: Butter ratios recover after slump
* Cocoa butter price ratios recover on bargain buying
* Talk of short-time working by cocoa grinders
* Good bean availability despite low Ivory Coast arrivals
HAMBURG, Feb 15 (Reuters) - Price ratios for the key chocolate ingredient cocoa butter were slightly firmer in Europe's cash cocoa market this week on bargain hunting after recent price falls coupled with weaker futures, dealers said on Friday.
Price ratios for cocoa butter for February/March delivery rose to between 1.93-1.97 times the London March cocoa bean contract <LCCH3 >, up from 1.90 last week.
"There was some moderate bargain hunting this week," one trader said. "In the past there has been industry buying when futures markets go down and we saw this again this week, with butter purchases made hand to mouth for nearby deliveries."
London cocoa futures on Tuesday touched a 10-month low as West Africa's mid crop cocoa development was benefiting from favourable weather and the prospects of larger cocoa supplies were weighing on the market.
Butter ratios fell in early February, weighed down by heavy supplies. Traders noted butter price ratios were still below the 2.0 level seen in January.
There was market talk that one of the U.S. multinationals had been a heavy cocoa butter seller in past weeks.
Traders said cocoa bean demand was restrained as industry hoped for further falls in futures prices. Market talk continued that several big European cocoa grinding companies were either on short time working or operating well under capacity because of slack demand from confectionery producers.
Europe's fourth-quarter 2012 cocoa grind fell 6.2 percent on the year. Germany's fourth quarter 2012 cocoa grind slumped 18.73 percent on the year.
"Some of the big European bean processors seem to be operating well under capacity because of the sluggish consumer spending in several European countries especially the south," another trader said. "This is reducing bean demand."
Bean sellers were seeking higher differentials to offset falling futures, with good quality Ivory Coast beans for nearby delivery offered in a range between 40-50 pounds over London's March contract against 30-40 pounds last week.
West African option beans with optional deliveries from Ivory Coast, Nigeria, Ghana and Togo were quoted little changed at between 40 to 60 pounds over London, an executive at one cocoa processor said.
Dealers were taking a relaxed view of low arrivals of cocoa beans in ports in top producer Ivory Coast.
Cocoa arrivals at Ivory Coast ports fell to 883,000 tonnes since the start of the season in October against 922,000 tonnes in the same period of the previous season, exporters said on Monday.
"There are enough beans to buy but it is difficult to make purchasing decisions against such an uncertain outlook for chocolate consumption, especially in the huge German market," a trader said.
German 2012 chocolate output fell 1.1 percent on the year as manufacturers suffered from falling exports and rising commodity prices, the German confectionery industry association BDSI said in January.
The outlook for 2013 remains "highly challenging" with the euro zone crisis creating great risks for Germany's confectionery industry, the BDSI said. (Reporting by Michael Hogan; editing by James Jukwey)
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