Cocoa-Butter Ratio Rebounds as Demand Builds and Powder Drops

The cost of cocoa butter relative to bean prices rebounded in Europe in the past six weeks as demand improved and processors adjusted to lower powder prices, according to three traders with direct knowledge of the sales.

The so-called butter ratio was 2.05 to 2.10 times the cost of 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 1.85 to 1.90 on March 15. Cocoa powder fell to 1,962 euros ($2,556) a metric ton on April 19, down 12 percent from March 15, according to figures from KnowledgeCharts, a unit of researcher Commodities Risk Analysis in Bethlehem, Pennsylvania.

“A degree of tightness seems to have developed in the butter market,” Sholom Sanik, an analyst at Friedberg Mercantile Group Ltd. in Toronto, wrote in a report e-mailed yesterday. “Butter prices have maintained their recent strength in both Asia and Europe.”

Processing, or grinding, of cocoa beans produces powder and butter. Grinders can sometimes raise butter prices to make up for declines by powder and attempt to keep their profitability stable. Cocoa butter accounts for as much as 20 percent of the weight of a chocolate bar, and powder is used to make chocolate-based cookies, soft drinks and ice cream.

Global chocolate confectionery sales rose 1.5 percent from September through January after being unchanged a year earlier, according to earnings presentations by Barry Callebaut AG, which supplies bulk chocolate to candy makers. Sales in western Europe climbed 1.4 percent in the period after falling 2.9 percent a year earlier, according to the Zurich-based company.

Cocoa for delivery in July fell 0.6 percent to 1,546 pounds ($2,394) a ton by the close on NYSE Liffe. Prices are up 7.7 percent this year.

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