By Leslie Josephs
NEW YORK--Cocoa futures prices bounced up on Friday, after a
report showed processing of the key chocolate ingredient in North
America hit a record high last quarter.
The December cocoa contract on the ICE Futures U.S. exchange
settled 1% higher at $3,118 a ton.
In the July-September period, North American factories processed
138,027 metric tons of cocoa beans, according to data from the
National Confectioners Association. It was the largest amount
processed since 2000, the farthest back data goes as posted on the
trade group's website.
The amount processed was 4.6% more than the like year-earlier
period, which had also been a record. Analysts and processors had
predicted the grindings would be little changed from the previous
year, with estimates ranging from a 1% decrease to a 1%
increase.
The quarterly grindings, or tonnage, of beans processed into
cocoa powder and other products used in confections are considered
a barometer for chocolate demand.
"The grind is stronger than forecast, and the anticipated
degradation of consumption due to price hikes is slow to
materialize," said Kip Walk, head of sustainability at processor
Blommer Chocolate Co., which was included in the NCA's survey.
In July, Hershey Co. (HSY) and a Mars Inc. unit raised prices
for U.S. chocolate products to offset rising costs.
Cocoa prices are up 15% this year due to strong demand and
concern the Ebola outbreak in West Africa, the epicenter of the
disease, would hinder the exportation of cocoa beans. West Africa
is the source of more than two-thirds of the world's supply of
cocoa.
In other markets, arabica-coffee futures prices slipped on
expectations of rainfall in dry areas of Brazil's coffee belt. The
world's top coffee grower was hit by drought earlier this year,
which clipped output this season. Continued dry weather fueled
worries over the size of next season's harvest, propelling futures
prices to nearly three-year highs.
December arabica fell 3% in price to $2.1065 a pound, the lowest
settlement since Oct. 3.
Despite some forecasts for rainfall next week, some experts
argue the damage has already been done. "Light rains will not solve
the problem," said Thiago Cazarini, founder of brokerage Cazarini
Trading Company in Varginha, Brazil. "The market trembles every
time weather agencies report future rains, but the truth is
one-week rains will not solve the problem and the next crop is
shrinking by the second."
December cotton fell 0.9% to a two-week low of 63 cents a pound,
after the U.S. Department of Agriculture reported net cotton-export
sales of upland-variety fiber dropped 90% in the week ended Oct. 9
from the previous week after Chinese buyers canceled their purchase
of close to 15,000 bales of cotton.
Orange-juice concentrate for November fell 0.4% to end at $1.35
a pound, while March sugar eased 0.3% to 16.62 cents a pound.
Write to Leslie Josephs at leslie.josephs@wsj.com
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