Cocoa grinders in Ivory Coast cut purchases by 20% as margins shrink

Cocoa grinders in Ivory Coast have voluntarily cut their cocoa bean purchases by 20% since January because of shrinking margins resulting from surging global prices, industry sources said.

The reduction, which is also affecting processing volumes, also follows a drop in local cocoa production that has intensified competition between exporters and processors, according to exporters and grinders who spoke to Reuters.

Five Ivory Coast-based grinders and eight exporters said that beans from the current mid-crop harvest are of lower quality, with reduced fat and butter content, preventing factories from running at full capacity.

Processors are now buying only what they need for immediate use and operating with minimal inventories, abandoning the larger stockpiles held in previous seasons.

"We have, as usual, reserved the mid-crop for grinders, but they bought much less than last year," said a source at the Coffee and Cocoa Council (CCC). "They blame higher global cocoa prices and bean quality, which is more acidic and has less butter."

Butter has become very expensive and sales are slow, said the director of an international export company based in Abidjan.

"There’s no point in continuing to buy very expensive beans to produce butter that sells with difficulty. We had to slow down activity to preserve margins and profitability," he said.

Ivory Coast, which processes 750,000 metric tons of cocoa annually, has registered a decline in grinding this year, with April and May down 7% and 8.5% respectively, CCC data shows.

The average free fatty acid (FFA) content, typically 1.75%, has spiked to 12% while bean count per 100 grams jumped from between 106 and 110 to 150 in the mid-crop, curbing processing yields further.

Grinders say they are struggling to pass higher costs for beans and processed products to chocolate makers and, ultimately, consumers.

"No one wants to pay more for lower-quality beans," said one processing company executive. "Plus, butter is so expensive that clients buy less and are looking for alternatives."

Another industry player said: "No one has six months of stock like before. We just have stock for a few weeks and process as we go, in reduced quantities."