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Cocoa Butter Stabilizes in Europe as Grinders Boost Processing

The price of cocoa butter, which gained 65 percent last year, stabilized in Europe in the past two weeks as bean processors began boosting output after a slowdown last year, according to three traders who have direct knowledge of the sales.

The cost of cocoa butter relative to the price of beans, or the so-called butter ratio, was 2.05 to 2.1 times the cocoa futures on the NYSE Liffe exchange, said the traders, who asked not to be identified because they aren’t authorized to speak to the media. The ratio was 2 to 2.1 on Jan. 4.

Cocoa butter rallied last year as grinders slowed bean processing after a drop in the price of by-product cocoa powder reduced their profitability. The butter ratio was 2 on Dec. 28, 2012, up from 1.21 on Dec. 30, 2011, according to data from KnowledgeCharts, a unit of research company Commodities Risk Analysis in Bethlehem, Pennsylvania.

Delfi Cocoa (Europe) GmbH is increasing processing at its Hamburg plant after a six-month slowdown, Karel Menu, the company’s managing director, said on Jan. 7. Cargill Inc. has started to increase grindings after cut backs last year, Jos de Loor, president of the cocoa and chocolate unit, said Nov. 21.

Cocoa bean processing in Europe fell 6.2 percent in the fourth quarter, the Brussels-based European Cocoa Association said this week. That compared with a 16 percent decline in the previous three-month period and an 18 percent drop from April to June, ECA data showed.

When cocoa beans are ground, about 80 percent is turned into cocoa liquor, which is then processed into powder and butter, according to Barry Callebaut AG, which supplies chocolate to Nestle SA. Grinders’ profitability is determined by the prices of powder and butter divided by that of beans, giving the so-called combined ratio.

Cocoa for March delivery rose 0.4 percent to 1,461 pounds ($2,340) a ton on NYSE Liffe.

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