ORLANDO, FLA. – Indications of improving cocoa demand, based on recent cocoa grind data, should continue as global bean production declines in the current year, said Steve Wateridge, managing partner, Tropical Research Services, at the International Sweetener Colloquium in Orlando on Feb. 13.

“There’s no reason strong growth won’t continue,” Mr. Wateridge said, noting that lower cocoa bean futures in 2017 were “having their desired effect.” Still, the market needs to wait and see if cocoa bean futures are low enough, he said. He expects New York cocoa bean futures to continue trading in their recent range.

Cocoa butter prices, which have been rising since late December, also should remain strong, Mr. Wateridge said, adding that the closely watched cocoa butter ratio was at a 10-year high and that cocoa processor margins were strong.

On the other hand, nearly flat cocoa powder prices suggest slow powder sales, he said. There were indications powder stocks were growing and may force some processors to reduce grind, he said, as nearly equal amounts of butter and powder are produced when processing beans.

Cocoa butter prices in early February were up about 20% from a year ago while powder prices were down about 10% to 15%.

Production was expected to be lower in nearly all key regions this year. Cocoa bean production was expected to decline about 4.5% in the current 2017-18 crop year, with a global surplus of 46,000 tonnes, which is negligible compared with a surplus estimated at 408,000 tonnes in 2016-17, Mr. Wateridge said. He forecast global cocoa bean production at 4.573 million tonnes in 2017-18 and at 4.620 million tonnes next year with a surplus at only 50,000 tonnes. The global stocks-to-use ratio was at a comfortable level, he said.

The market is “where it should be given what we know,” Mr. Wateridge said.