Cocoa powder prices eased in Asia on Friday, weighed down by the uncertain economic and demand outlook for Europe and the United States, with expectations of rising output from West African producers also weakening prices, dealers said. "Cocoa powder is going down," said one Indonesia-based grinder
"There is pressure on the grinders in Asia - the terminal price has been declining a lot. "It's because of the good crop forecasts in Ivory Coast and the whole West Africa - we are hearing of a surplus of between 300,000-400,000 tonnes." Cocoa powder, used for coatings in chocolate-making, beverages and ice cream, slipped to about $4,900-$5,200 a tonne. "Except for Indonesia, the rest are doing well, in terms of crop production," the trader added. Cocoa output in Indonesia, the world's third-largest producer, is seen down about 25 percent this year due to wet weather and disease, the Indonesian Cocoa Association said last week.
Southeast Asia's largest economy however, plans to triple domestic cocoa consumption over the next three years to boost the local manufacturing industry, which could impact exports further. Cocoa butter, a key ingredient for making chocolates, was offered at ratios of about 0.80 to 1.00 times London futures.
"The butter ratio is still bearish and the bidders are trying to get below 0.80 because the BRIC economies, the US and Europe next year, have a poor forecast for consumption," the trader added. Concern about the slowdown in China and the United States, plus the gloomy outlook as Europe remains mired in its debt crisis, have hit investors hard in the last few months.
"The terminal market is easing off and that may give some support to the butter side," said a Singapore-based dealer. "The sentiment for butter is still soft. We need to wait for a signal." Asian shares inched down on Friday, tracking New York and European shares lower as weak Chinese trade data raised concerns about the global economy, while the euro eased after another sovereign debt ratings downgrade.