The “combined cocoa ratio” is the combined sales price for cocoa butter and cocoa powder relative to the cocoa bean price. The formula is:
|price of cocoa butter
||price of cocoa powder|
|combined cocoa ratio||=||+|
|price of cocoa beans||price of cocoa beans|
For cocoa processors, profitability depends on the ratio between input costs (price of cocoa beans) and output prices (price of cocoa butter and powder).
A simple example shows the interaction between the different variables: The price for cocoa beans goes up (driven by higher demand (while supply level remains constant), speculation and/or bad harvests), but the price of cocoa powder goes up less as a result of economic recession - as a consequence, the combined ratio will fall.