* Butter ratios hold near strongest level since December
* Powder prices unchanged, may fall to attract buyers (Adds technicals)
By Lewa Pardomuan
SINGAPORE, Aug 20 Chocolate makers stayed away from the physical market this week as Asian cocoa butter ratios held near their highest since December, dealers said on Wednesday, while grinders could cut powder prices to lure buyers.
Cocoa processing in Asia has risen in the past two years as more companies set up grinding facilities in Indonesia to secure bean supply. Although demand for butter has generally been steady, grinders are struggling to sell cocoa powder.
About 40 percent of cocoa that is ground ends up as powder, another 40 percent as butter and the rest as paste and cocoa liquor. Butter gives chocolate its melt-in-the-mouth texture, while powder is used in cakes, ice cream, biscuits and drinks.
Cocoa butter ratios, an indicator of demand, were unchanged from last week at 2.40 to 2.45 times London futures <0#LCC:>. Butter prices are calculated by multiplying London and New York bean futures <0#CC:> by the ratio, with the values currently at between $8,000 and $8,200 a tonne.
Butter prices stood at about $6,800 a tonne in January.
"Trading has frozen and nothing has moved. It's about time that Asia slowed down. Grinders with old cake stocks will probably be selling their powder cheaply," said a dealer in Indonesia.
"It's better for you to do it, rather than not moving the product at all."
When processing beans, grinders initially get cocoa cakes, which they press into powder. Grinders often refrain from turning cakes into powder when demand is weak.
Powder prices were unchanged at between $1,500 and $2,100 a tonne, but dealers said it was unlikely buyers would chase powder at prices above $2,000 because of ample stocks.
Grinders do not reveal the size of their powder stocks.
London cocoa futures <0#LCC:> have gained more than 17 percent this year on expectations demand will outstrip supply in the current 2013/14 crop year. [SOF/L[
Cocoa bean prices have risen sharply this year due to speculative buying, causing chocolate makers such as Nestle , Mondelez International, Mars Chocolate North America and Hershey Co to raise chocolate prices in recent months.
(Editing by Joseph Radford)