Asia’s Chocolate Craving Paces Global Demand: Chart of the Day

October 8, 2013 Leave a comment

Asia’s Chocolate Craving Paces Global Demand: Chart of the Day

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Asia’s craving for chocolate will pace the 2.1 percent increase in global demand in 2014 amid a rally in cocoa prices to the highest in almost two years. The CHART OF THE DAY shows chocolate-confectionary sales in the Asia Pacific will climb 5.4 percent next year from 2013, more than doubling since 1999, according to data from Euromonitor International Ltd. Sales in North America were forecast to drop 0.1 percent in 2014, capping a 9.9 percent decline in 15 years.The International Cocoa Organization said on Sept. 27 that processing of the main ingredient for chocolate will outpace the global bean harvest by as much as 70,000 metric tons in the year that began Oct. 1. Jean-Marc Anga, an executive director of the London-based group, cited prospects for a jump in demand from China’s middle class. Consumption is expanding in Asia as incomes rise.

“There’s a long-term trend at work,” said Paul Christopher, the St. Louis-based chief international strategist at Wells Fargo Advisors LLC, which manages $1.3 trillion. “It’s one of the areas where you can see food demand steadily increasing, especially in sectors that previously didn’t have much foothold in Asia.”

This year, cocoa futures have climbed 21 percent, the biggest gain among 24 raw materials in the Standard & Poor’s GSCI Spot Index. Drier-than-normal weather hurt crops in West Africa, which produces 70 percent of the global harvest. Yesterday, the price for December delivery reached $2,710 a ton on ICE Futures U.S. in New York, the highest for a most-active contract since Nov. 8, 2011.

Cocoa costs may continue to climb until farmers increase planting next season, Christopher said. Indonesia, the world’s third-largest grower, may become a net buyer next year as domestic companies process more beans to make chocolate, a local industry group said.

To contact the reporter on this story: Luzi Ann Javier in New York at ljavier@bloomberg.net

Filed under Macro Trends

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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