January 15, 2015 / 9:44 PM / in 3 years

UPDATE 2-North American cocoa grind sees first drop in two years

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By Marcy Nicholson

NEW YORK, Jan 15 (Reuters) - North American cocoa grindings fell for the first time in two years, a strong sign that higher chocolate prices have begun to curb consumers’ appetites for the sweet treat.

The drop is smaller than in Europe, the world’s biggest cocoa processing region, as it continues to struggle through a financial crisis.

North American cocoa grindings for the fourth quarter of 2014 fell 1.95 percent year-on-year to 122,886 tonnes, according to data from the National Confectioners Association on Thursday.

That brought full-year grindings to 521,657 tonnes, up 2.4 percent from 2013 and the highest since the data pool was expanded to include Mexico and Canada in 2009.

The results, which are considered a gauge of demand for chocolate’s key ingredient, are in line with estimates that ranged widely from 4 percent lower to 2 percent higher.

The lower quarterly processing data came as higher chocolate prices reached store shelves after chocolate makers such as Hershey Co and Mars Chocolate North America raised their prices due to soaring costs for cocoa, milk and nuts in 2014.

Earlier in the day, Europe’s fourth-quarter cocoa grind was reported down 7.4 percent from the same period last year to 323,061 tonnes, its lowest fourth-quarter grind since 2005.

It was lower-than-expected and weighed on cocoa futures prices.

One trader said the steep drop may have been due to the possibility of at least one large grinder buying a semi-finished product from a producing country rather than processing it themselves as cocoa powder stocks were high.

Mondelez International Inc, the maker of Cadbury chocolate and Oreo cookies, said last year that its price increases sparked a backlash by some European consumers and retailers.

All eyes are now turning to Asia, which has yet to report its quarterly grind data. Processing capacity has soared in Indonesia while dropping sharply in Malaysia.

Bean processing is increasingly taking place in the world’s three biggest producing countries: Ivory Coast, Ghana and Indonesia. Cocoa grindings rose by 8 percent in the 2013/14 marketing year in West Africa and 21 percent in Indonesia, International Cocoa Organization data showed.

The 11 companies that took part in the North American survey are: ADM Cocoa, Barry Callebaut, Blommer Chocolate Co, Cargill Cocoa & Chocolate Co, ECOM, Ghirardelli Chocolate Co, Guittard Chocolate Co, Hershey Co, Mars Chocolate North America, Nestle Chocolate & Confections and World’s Finest Chocolate Inc. (Reporting by Marcy Nicholson; Editing by Peter Galloway and Alan Crosby)

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