NEW YORK (Jan 24): Asian consumers are finally starting to balk at higher chocolate prices, sending cocoa futures to the longest rout in more than two years.

Processing of the beans in Asia fell 17 percent in the fourth quarter from a year earlier, a sign of waning demand for the chocolate ingredient, the Singapore-based Cocoa Association of Asia said on Friday.

Grinding also declined in Europe, North America and Brazil, separate industry reports showed this month.

Slowing global economies are crimping demand as consumers look for ways to cut disposable spending after chocolate costs increased.

Cocoa futures touched a three-year high in September amid concern that the deadly Ebola disease would disrupt shipments from West Africa, which produces 70 percent of global supply.

Prices have since fallen 19 percent as exports continued to flow from Ivory Coast and Ghana, the top growers.

“The market is reacting to the grinding figures,” Bill Pearce, a vice president at McKeany-Flavell in Oakland, California, said in telephone interview.

“The demand for chocolate is down because prices are quite high. If you look at the world economy, the US is still doing pretty good, but we have seen struggles in Europe and Asia.”

Cocoa for March delivery dropped 1.6 percent to settle at US$2,755 a metric ton at 12:03pm on ICE Futures US in New York.

Earlier, the price touched US$2,754, the lowest for a most-active contract since Jan 23, 2014. The price fell for sixth session, the longest slide since December 2012.

'Sweet tooth'
Futures surged 38 percent in the previous three years as Asian consumers led global demand growth, eroding inventories.

The gains prompted chocolate makers including Hershey to boost prices in 2014 to cover ingredient costs.

“Falling cocoa grindings in Europe, North America and Asia suggest that the world has lost some of its sweet tooth,” Hamish Smith, a commodity economist at Capital Economics in London, said in a report on Friday.

Smith said prices will fall to US$2,650 by the end of the year, lowering his outlook from a previous estimate of US$2,750.

Cocoa butter, a by-product of the beans used to make chocolate bars, has surged 38 percent since the end of 2010.

The higher prices may prompt some confection makers to use more substitutes, including alternative fats, Pearce of McKeany-Flavell said.

“It will be quite some time before we see prices at reasonable levels to stimulate consumption again,” he said.