Chocolatiers face further cocoa market confusion

By Neil Merrett

- Last updated on GMT

Related tags Cocoa supply chain Chocolate Icco Cocoa

A strong increase in cocoa supply from the Ivory Coast has failed
to put an end to market uncertainty over the price of the
commodity, says the International Cocoa Organization (ICCO).

In the organization's full monthly report for October, the daily price of Cocoa was down $23 (€15) from the previous month to $1,915 (€1,293) per tonne, though a drive for top-quality beans resulted in a late rally in prices. The findings will come as another sign of the volatility in the market for confectioners and other food manufacturers over growing concern about long-term stability in the cocoa supply chain. Leading confectionery manufacturers have already begun amending their operations due to this market uncertainty. After Cocoa prices on both the London and New York futures markets shot up during September, an influx of the bean from the Côte d'Ivoire did result in the price reductions during the first 10 days of the month, the ICCO said. ICCO daily prices continued to yoyo during October though with prices peaking at $2,025 (€1,367) per tone and falling to $1,868 (€1,261) at their lowest point over the period, the organisation said A late rally in futures prices occurred on the back of higher physical prices in the Ivory Coast for higher quality beans and fears that Indonesia's mid crop could be delayed until December due to unfavorable weather conditions, added the ICCO. While the organization added that the future prices were moving in no particular direction, the market continues to create difficulties for chocolate manufacturers. In September, Barry Callebaut chief executive Patrick De Maeseneire suggested to the Reuters news agency that companies may be encouraged to outsource their chocolate in light of rising prices for raw materials like cocoa and sugar. Nestle, Hershey and Cadbury have all recently made outsourcing deals for liquid chocolate with the company this year. This pricing climate has been compounded by increased demand for more premium brands of chocolate containing high concentrations of cocoa beans in markets like the US. According to a report on the market by Packaged Facts, overall US chocolate sales are forecast to reach $18bn (€13.2bn) by 2011, up from $16bn (€11.7bn) in 2006, driven in part by premium chocolate. Premium chocolate will account for 25 per cent of the market, mainly due to the reported health benefits of dark chocolate, according to Packaged Facts.

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