Established Cocoa Markets also Fall

I mentioned earlier that the emerging chocolate markets didn’t quite live up to their predicted potential. But the traditioal markets aren’t doing so well either. The German Candy Manufacturers Association (Bundesverband der Deutschen Süßwarenindustrie) released first quarter grindings numbers that showed a 17.2 percent decline to 87,576 tons compared to the first quarter of the previous year.

For Europe as a whole, the numbers aren’t a whole lot better. The European Cocoa Association reported that first quarter grindings dropped to 315,177 ton from 354,571 in the same quarter of the previous year. That’s a decrease of 11.1 percent.

Finally, the U.S. isn’t bucking this trend. Grindings dropped by almost 13 percent in the first quarter from 114,759 tonnes in the previous year to 99,875 tons in 2009.

However, cocoa prices are not in a freefall yet. The ICCO price still hovers around the $2,400/ton level.  The reduced production for the current cocoa year has so prevented a dramatic fall in world market prices. If consumption/grinding declines even further then we are bound to see price declines in the future. Several cocoa producing countries have announced plans to increase production, but it is not clear if these plans will yield the increased output predicted. If they do, then prices will weaken further.