(Rewrites paragraph 1 to provide context; adds trade comment,
By Marcy Nicholson
NEW YORK, July 17 A gauge of demand for
chocolate's key ingredient cocoa rose higher than expected in
North America in the second quarter, National Confectioners
Association data showed on Thursday, suggesting its demand
growth is outpacing Europe and Asia.
Cocoa grindings in North America, the world's second-biggest
chocolate-consuming region, jumped 4.52 percent to 131,737
tonnes in the second quarter of 2014 from 126,044 tonnes during
the same quarter a year ago, the data showed after the futures
markets had closed.
The results are above estimates that pegged grinding
anywhere from flat to 3 percent higher.
"With this grind, the bulls will be back to defend their
position. We're going to be higher tomorrow," said Nick Gentile,
managing partner of commodity trading advisor NickJen Capital in
New York, referring to the cocoa market.
Cocoa futures on ICE Futures U.S. rose around 50
percent over the past year to a three-year high of $3,149 per
tonne in early July. The market is concerned about a possible El
Nino weather phenomenon, strong cocoa butter demand and
forecasts for a global deficit.
While some analysts have said the current fundamentals do
not support the cocoa market's meteoric rise, these latest
grinding figures suggest consumption may be strong enough to
support firm futures prices.
Demand for cocoa butter, a byproduct of the cocoa bean that
gives chocolate its melt-in-the-mouth texture, has been strong
since the second half of 2013, causing its price ratio to cocoa
futures to remain unusually high. Meanwhile, demand for cocoa
powder, the bean's other main byproduct, has tumbled, causing
some processors in Asia and Europe to slow down in order not to
increase their already large volumes of powder, traders have
Last week, the second-quarter grind in Europe, the world's
biggest chocolate-consuming region, was reported down 0.7
percent from the same period last year at 307,938 tonnes, below
expectations of flat to 2 percent higher.
On Monday, Malaysia's grindings for the same period were
reported to have tumbled 9.9 percent from the year prior to
The higher-than-expected North American processing figure is
the second straight quarterly year-over-year rise and comes on
top of a steep rise of nearly 12 percent in the second quarter
of 2013. It also brings it near the 131,974 tonnes processed in
the third quarter of 2013, which was the highest quarterly since
the NCA added Canada and Mexico to their tally in 2009.
The data was collected from 11 companies with plants in
Canada, the United States and Mexico. Survey respondents
included chocolate makers Barry Callebaut, the Blommer
Chocolate Co, Hershey Co, Nestle SA, Archer
Daniels Midland Co and Mars Chocolate North America. The
aggregate number of 17 plants reporting was unchanged.
(Reporting by Marcy Nicholson; Editing by Jonathan Oatis, Andre
Grenon and Lisa Shumaker)