Weak prices reduce cocoa grinding

- Last updated on GMT

Related tags: Cocoa bean, Soybean, Adm

Industry reports of leading Ivory Coast cocoa exporter Archer
Daniels Midland (ADM) cutting capacity at its processing plant
there were taken stride Wednesday as analysts said it was just the
result of an industry trend that made grinding cocoa unprofitable

Industry reports of leading Ivory Coast cocoa exporter Archer Daniels Midland (ADM) cutting capacity at its processing plant there were taken stride Wednesday as analysts said it was just the result of an industry trend that made grinding cocoa unprofitable.

"It isn't going to affect anything. There is a lot of cocoa butter around and it doesn't pay to grind any more,''​ said one industry broker, referring to the capacity reduction.

One industry analyst explained that for more than a year the economics have not made it profitable to grind cocoa beans.

"The price you get for the two products, butter and cake, don't cover the costs which are the terminal price plus the differential and the labour and financing,''​ he said.

"ADM is just one more among many factories that are cutting back on grinding,''​ he added.

Calls to ADM corporate offices in Decatur, Illinois, for more information about this plant which produces around 70,000 tonnes of cocoa liquor, butter and cake annually, were not returned Wednesday.

One senior source in Ivory Coast described the capacity reduction as ``significant'' but gave no further details.

ADM is a world leader in agricultural processing. The company is the world's largest processor of soybeans, corn, wheat and cocoa. The company is also a leader in soy meal and oil, ethanol, high fructose corn syrup (HFCS), and flour.

In addition to the unprofitable relationship between the beans and the products, a decision by the Ivorian government in March 2001 to reduce 30 per cent tax breaks granted to grinders also contributed to the move.

ADM is one of the three leading companies exporting and grinding cocoa from Ivory Coast, the world's biggest producer. The others are Cargill, also a U.S. firm, and Switzerland's Barry Callebaut .

Related topics: Market Trends

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