* Butter ratios traded at 2.80 times ratios, highest since
* Powder prices hit a low at $1,400 from $1,700 last week
* Dealers await Malaysia's Q3 grindings data due next week
(Adds details, quotes)
By Lewa Pardomuan
SINGAPORE, Oct 11 Small volumes of cocoa butter
traded at the highest premiums in seven years in Asia this week
as chocolate makers chased cargoes ahead of the year-end festive
season, dealers said on Friday.
But some grinders had sharply cut the price of cocoa powder
to spur demand, raising doubts about the third-quarter
performance of Malaysian processors, whose figures are due for
release on Oct. 17.
Butter ratios rose to 2.80 times London futures from 2.75
times last week, according to Reuters monthly data.
CCMYID-BUT-P1. Powder hit a low of $1,400 a tonne from $1,700
last week, although there were also offers at much higher
Cocoa beans, when ground, yield roughly equal parts of
butter and powder, which is used in cakes, biscuits and drinks.
The price of butter, which gives chocolate its melt-in-the-mouth
texture, is determined by multiplying the ratio with relevant
contracts in London and New York futures. <0#LCC:> <0#CC:>
"Cocoa is really a very tough industry, and the management
is paying more attention to palm oil now. We are thinking
whether or not to continue with cocoa," said an official with a
grinder in Malaysia, that also owns palm oil plantations.
"We've sold off our butter and now we concentrate on selling
powder. The next bean procurement will depend on how the ratios
go. This industry is such a gamble. When the ratios go up,
powder will come down, regardless of your operating costs."
Butter ratios have soared to multi-year highs in Asia,
Europe and the United States as chocolate makers replenished
stocks and after the year's sluggish market and high powder
inventory prompted grinders to cut capacity.
Dealers noted several deals for cocoa powder in recent
weeks, but the drop in prices from $4,000 a tonne in January was
a indication that grinders were struggling to sell the product.
Grinders can end up with mountains of inventory of either
product if sales are slow. Next week's grindings data from
Malaysia could also offer clues to how processors deal with a
surge in global cocoa prices.
Cocoa grindings in Malaysia fell 3.1 percent on the year to
72,191 tonnes in the second quarter of 2013, which dealers
attributed to tighter supply of beans from Indonesia.
"Whenever we talk, powder prices are falling," said a dealer
in Singapore. "I think the price range of $1,400 to $1,500 is
quiet and people are buying, but the volumes are not good."
The grinder in Malaysia said he sold powder at $2,200
including freight to India last week, but other dealers said it
was likely to be a one-off deal.
Chocolate sales normally surge in the main consumer regions
of Europe and North America during Christmas, Valentine's Day
and Easter. In the United States, chocolate makers are also
preparing for Halloween.
(Editing by Clarence Fernandez)