Cargill sees cocoa supply meeting demand
London, August 23, 2011
Cargill expects world 2011/12 cocoa supplies will be adequate to meet demand, with the cushion of a sizable global surplus from the previous crop, the US agribusiness giant said on Tuesday.
"Weather has been pretty OK and pretty normal in the main regions, but given the fact that it hasn't been outstanding weather, and given the fact that we are positive with respect to demand, at best we see a balanced picture," Jos de Loor, managing director of cocoa and chocolate at Cargill, told Reuters.
"We will be fine with respect to supply given the surplus we had last year."
Analysts and traders forecast a world 2010/11 cocoa surplus in excess of 300,000 tonnes, after ideal weather led to a record West African crop.
Cargill expects global cocoa demand will continue to be driven by the emerging markets. "Cocoa consumption is following GDP so we have seen the main growth in cocoa and chocolate consumption in the emerging markets - Asia, Latin America, and to a certain extent Eastern Europe," De Loor said, adding he expects global growth of 2-3 percent per year.
When cocoa beans are processed, grinders get butter and cake, which is later pressed into powder for products including chocolate, cakes, biscuits, and beverages. Butter is used to make chocolate melt in the mouth and also for soaps and cosmetics.
Emerging markets consume more cocoa powder-based products, rather than the cocoa butter-based products popular in mature markets, which has led to more expensive cocoa powder prices and weaker butter values.
Historically, butter was the more valuable product from cocoa beans. "In recent years powder demand has definitely outpaced butter demand which has been based on the fact that most of the application in emerging countries are powder based," De Loor said.
"We don't see a reversal in the trend at this particular point in time." - Reuters