(Bloomberg) — Cocoa grindings in Europe and Asia fell in the last three months of 2024, the strongest signal yet that chocolate makers are struggling with record prices and low inventories.
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Figures released on Thursday showed that bean processing dropped by 5.4% in Europe and edged lower by 0.5% in Asia from a year earlier. Fourth quarter grindings in both regions were lowest in since 2020, when the Covid-19 lockdowns and trade disruptions hit the chocolate business.
The decline in both regions “suggests that demand is not that great,” said Steve Wateridge, head of research at TRS by Expana. “But then with prices where they are, that shouldn’t be a surprise.”
Cocoa futures swung as the market assessed the data. The most-active contract in New York fell as much as 2.6% in early trading, before edging up.
Cocoa prices nearly tripled last year, making it the strongest-performing major commodity, as continued supply shortfalls in Ivory Coast and Ghana, the world’s top producers, resulted in the largest-ever supply deficit. That pushed chocolate makers to use less volumes of cocoa in products even as they tapped stockpiles to meet resilient demand for the sweet treat.
The latest data showed that full-year grindings in Europe, the world top consuming market, fell for second year in a row. Asia cumulative grindings for 2024 saw a slight increase. North American data is expected later Thursday.
While the so-called grinds — where cocoa is turned into butter and powder that ends up in everything from candy bars to ice cream — have long served as a gauge for demand, tight supplies are making the link more tenuous.
Still, the markets have been closely watching the numbers in anticipation of a steeper slump as chocolate makers face the expensive task of rebuilding stockpiles at costly levels.
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