(Nasdaq) – Cocoa prices dropped on Friday, after data out of Asia revealed chocolate’s main ingredient is suffering from weak demand.
Cocoa for December fell 0.5% to $3,110 a ton on the ICE Futures U.S. exchange.
The Cocoa Association of Asia reported a 1.6% drop in cocoa beans processed to 149,162 metric tons in the third quarter, compared with 151,325 tons in the same quarter a year ago. It is the fifth straight year-on-year fall in the region and follows weak demand data out of Europe and North America, the two largest consumers of the main ingredient in chocolate.
Meanwhile, the European Cocoa Association reported a 2% year-on-year increase in cocoa beans processed to 334,362 tons in the third quarter. North American factories saw a decrease of 10% from the previous year to 124,229 metric tons of cocoa beans processed by North American factories, according to data from the National Confectioners Association.
“We suspect that the fall in cocoa grindings continues to reflect the weaker macroeconomic performance of emerging economies, particularly China, which has reduced consumers’ appetite to splash out on luxury items such as chocolate,” Hamish Smith, commodities economist at Capital Economics, said in a note. He also pointed to higher prices for consumers as a factor in weakening sales.
In other markets, prices for raw-sugar futures fell 2.2.% to 14.28 cents a pound. Traders took profits, largely ignoring data out of Brazil that show less cane crushed in the first half of October compared with a year earlier because of rains that slowed the harvest.
Industry group Unica reported that mills in Brazil, the biggest producer and exporter of sugar, crushed 36.1 million metric tons in the first half of the month, down 8.3% versus the same period last year. The region’s mills crushed 36.1 million metric tons in the first half of this month, a decline of 8.3% compared with a year ago, Unica said. Sugar production fell 11.6% to 2.1 million tons, and ethanol output declined 12.2% to 1.7 billion liters.
Arabica coffee for December delivery dropped 1.2% to $1.1845 a pound, cotton for December rose 0.4% to 63.07 cents a pound and frozen concentrated orange juice futures fell 0.8% to $1.3385 a pound.
