UPDATE 2-N. America 2nd-quarter cocoa grindings beat expectations
(Rewrites paragraph 1 to provide context; adds trade comment, market background)
By Marcy Nicholson
NEW YORK, July 17 (Reuters) - 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 said. Continued...