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Investing in Cocoa

Within this guide, we’ll take a look at how investors might go about investing in cocoa, which is the powdered substance obtained from the seeds of the cocoa or cacao tree. We’ll look at the macroeconomic events that cause the cocoa price to move and how you can gain exposure to it within your portfolio. Our guide to investing in Cocoa will help you understand:

  1. Who is the largest importer of Cocoa beans?
  2. Which country is the largest exporter of Cocoa?
  3. How is Cocoa made?
  4. What factors affect Cocoa prices?
  5. How do I invest in Cocoa?
  6. Investing in Cocoa futures
  7. Investing in Cocoa ETFs

Who is the largest importer of Cocoa beans?

The United States stands as the primary cocoa importer globally, with the Netherlands and Germany following closely. Of the 2.8 million tons of cocoa produced every year Europe consumes almost half while the US buys 0.4 million tonnes. Major players in this market include renowned chocolate manufacturers like Nestle, Hershey’s, and Cadbury, along with food giants like Kraft.

Which country is the largest exporter of Cocoa?

Cocoa is a capricious plant that likes the heat and damp. It will only grow within 10 degrees north or south of the equator, in rain-forest type conditions. Ivory Coast, Ghana and Indonesia produce two thirds of the world’s cocoa and of those, Ivory Coast is by far the most significant producer.

The Ivory Coast has consistently held the position of the world’s largest exporter of cocoa. This West African nation is renowned for its significant contribution to global cocoa production and trade. Côte d’Ivoire’s favorable climate and soil conditions make it a prime region for cultivating cocoa, and the country’s economy heavily relies on cocoa exports.


The cocoa industry plays a vital role in the economic development of Côte d’Ivoire, providing income for millions of farmers and supporting various related industries.

In 2002 a coup split Ivory Coast into the government-controlled south and rebel-controlled north. Conflict has persisted ever since. Throughout the decade the country continued exporting cocoa, but the political situation remains precarious, with exports occasionally banned. When this happens Ghana usually steps in with increased production to alleviate some of the shortfall.

The International Cocoa Organization (ICCO) serves as a representative body for cocoa producers and provides valuable statistical information about the crop.

How is Cocoa made?

The cocoa tree’s botanical name is theobroma cocoa, which stands for “the food of Gods” – no surprise for chocolate lovers. A cocoa tree looks a little like an apple tree, but with broader leaves. Each tree produces 20-30 pods a year.   A whole year’s crop from one tree makes one pound of cocoa.

Ripe brown speckled pods can be found on the tree throughout the year, but the main harvest starts in September.  Harvest can last until early in the next year, often causing prices to dip between October and January.

Traditionally, cocoa is sold in the form of beans.  Buyers process those into chocolate, cocoa butter, cocoa powder, liqueur, etc. To increase the value of exports some producer countries have developed their own facilities for grinding beans.

What factors affect Cocoa prices?

The price of cocoa is influenced by a combination of factors that impact the global cocoa market. Here are some key factors:

Weather Conditions: Cocoa is primarily grown in tropical regions, and adverse weather conditions such as droughts, excessive rainfall, or hurricanes can affect crop yields. Unfavorable weather can lead to supply shortages, putting upward pressure on prices.

Global Demand: The overall demand for chocolate and cocoa-based products is a crucial determinant of cocoa prices. Economic conditions, consumer preferences, and changes in chocolate consumption patterns globally can impact demand and subsequently influence prices.

Pest and Disease Outbreaks: Cocoa crops are susceptible to various pests and diseases. Outbreaks can reduce yields, impacting the global supply of cocoa and causing price fluctuations. Drought leads to slower growth, while too much rain can cause outbreaks of black pod disease. Brazil grappled in the 1990s with the witch’s broom fungus that nearly decimated the cocoa crop.

Currency Exchange Rates: Cocoa is traded globally, and its prices are often denominated in US dollars. Currency fluctuations can affect the cost of cocoa for buyers and sellers in different regions, influencing price dynamics.

Political Stability: Political instability in major cocoa-producing regions can disrupt supply chains, leading to potential shortages and price volatility. Countries like Côte d’Ivoire and Ghana are significant contributors to global cocoa production.

Trade Policies: Changes in trade policies, tariffs, and regulations can affect the flow of cocoa in the global market, impacting prices. Trade agreements and geopolitical events can also play a role.

Speculation and Market Sentiment: Like any commodity, cocoa prices can be influenced by speculative trading and overall market sentiment. Traders’ perceptions of future supply and demand conditions can lead to price fluctuations.

Supply Chain Issues: Challenges in the cocoa supply chain, such as transportation and logistics issues, can affect the timely delivery of cocoa to market, influencing prices.

Technological Advances: Advances in agricultural practices and technology can impact cocoa yields. Improved farming techniques may lead to increased production and potential price adjustments.

Ethical and Sustainability Concerns: Growing awareness of ethical and sustainable practices in cocoa production can influence consumer preferences and, consequently, impact the cocoa market. Certification programs, such as Fair Trade and Rainforest Alliance, play a role in shaping market dynamics.

How do I invest in Cocoa?

There are a number of ways to invest or trade Cocoa. The most popular include

  • Futures
  • Exchange Traded Funds
  • CFDs
  • Spread betting

Some of these products are leveraged which means that both profits and losses are magnified. Make sure you understand how leverage works before you dive in.

For investors that are interested in investing in cocoa, cocoa futures are traded on the NYSE Liffe exchange in London and on NYMEX in New York.

Investing in Cocoa ETFs

Exchange Traded Funds are a cheap and easy way to invest in Cocoa. They provide investors with a convenient way to gain exposure to the cocoa market without directly trading futures contracts.

These ETFs typically track the performance of cocoa-related indexes, offering diversification within the commodities sector.

Investors can buy and sell cocoa ETF shares through their investment platform of choice, allowing for greater liquidity and flexibility compared to traditional commodity trading.

Notable cocoa ETFs may include holdings in companies involved in cocoa production, processing, and distribution.

However, like any investment, it’s crucial for investors to conduct thorough research, considering factors such as expense ratios and underlying index methodology before incorporating cocoa ETFs into their portfolios.

Invest in Cocoa with these ETF platforms

BrokerMinimum DepositMarketsProducts
Interactive Brokers
Interactive Brokers
$0Bonds
Commodities
Currencies
Indices
Stocks & Shares
CFDs
ETFs
FX
Futures & Options
ISA
Stocks & Shares

Interactive Brokers is one of the world’s leading futures brokers with the ability to offer direct market access to a range of securities. With previous personal experience of trading with this broker, The Armchair Trader knows that they offer excellent platform stability, an excellent range of markets, and solid customer support

 
Hargreaves Lansdown
Hargreaves Lansdown
£100Bonds
Commodities
Currencies
Indices
Stocks & Shares
ETFs
ISA
Stocks & Shares

With competitive rates for trading shares and ETFs and significant discounts on funds, Hargreaves Lansdown offer a cost effective way to access a broad range of markets. You can open a Stocks and Shares fund, ISA or SIPP for yourself or a Junior ISA for your children.

We like their Portfolio+ and Master Portfolio services - they offer a great option for investors who are unsure about where to start.

Hargreaves Lansdown is a market leading, FTSE 100 listed broker that can cater for the needs of the majority of investors. A solid choice in our opinion.

 
IG
IG
£0Bonds
Commodities
Currencies
Indices
Stocks & Shares
CFDs
ETFs
FX
Futures & Options
ISA
Spread Betting
Stocks & Shares

Widely recognised as the largest broker of its kind for CFDs and Spreadbetting, IG has now expanded its services to include Equities and ETF trading. Their range of markets is wide reaching while both trading and share dealing costs are low. We really like their Smart Portfolio's which are ideal for inexperienced investors to gain exposure to the markets.

With deeper pockets to invest in their services than most brokers, IG's platform suite and trading support tend to lead the way. IG is a good all-rounder for novice through to experienced traders and investors.

Investing in Cocoa futures

Cocoa futures represent standardised agreements to buy or sell a specific quantity of cocoa at a predetermined price on a future date.

Traded on commodities exchanges like the Intercontinental Exchange (ICE) and Chicago Mercantile Exchange (CME), cocoa futures enable investors, hedgers, and speculators to participate in the cocoa market.

These contracts provide a transparent and regulated platform for price discovery, risk management and investing in cocoa.

Trade Cocoa futures with these futures brokers.

BrokerMinimum DepositMarketsProducts
Interactive Brokers
Interactive Brokers
$0Bonds
Commodities
Currencies
Indices
Stocks & Shares
CFDs
ETFs
FX
Futures & Options
ISA
Stocks & Shares

Interactive Brokers is one of the world’s leading futures brokers with the ability to offer direct market access to a range of securities. With previous personal experience of trading with this broker, The Armchair Trader knows that they offer excellent platform stability, an excellent range of markets, and solid customer support

 
IG
IG
£0Bonds
Commodities
Currencies
Indices
Stocks & Shares
CFDs
ETFs
FX
Futures & Options
ISA
Spread Betting
Stocks & Shares

Widely recognised as the largest broker of its kind for CFDs and Spreadbetting, IG has now expanded its services to include Equities and ETF trading. Their range of markets is wide reaching while both trading and share dealing costs are low. We really like their Smart Portfolio's which are ideal for inexperienced investors to gain exposure to the markets.

With deeper pockets to invest in their services than most brokers, IG's platform suite and trading support tend to lead the way. IG is a good all-rounder for novice through to experienced traders and investors.

 
Tickmill
Tickmill
£100Bonds
Commodities
Currencies
Indices
Stocks & Shares
CFDs
Futures & Options

Tickmill is an established, regulated broker. With a focus on platform technology, fast reliable trading and low costs, it is a good choice for the experienced high volume trader.

Contract for Differences

Contract for Differences are leveraged products which means they involve greater risk. While there is an opportunity to increase your profits, there is also the chance of greater losses. The ASX 200 is often called the AUS200 on CFD trading platforms.

Trade Cocoa with these CFD brokers

BrokerMinimum DepositMarketsProducts
Pepperstone
Pepperstone
£0Bonds
Commodities
Currencies
Indices
Stocks & Shares
CFDs
FX
Spread Betting

With a strong focus on the trading experience, industry leading technology, low costs and award-winning client support, we feel that Pepperstone is a good option for the more established high volume day trader.

 
FP Markets
FP Markets
$100Bonds
Commodities
Currencies
Indices
Stocks & Shares
CFDs
FX

FP Markets is an established ASIC, CySEC FSP and CMA regulated broker. They offer access to the industry leading MetaTrader platforms and provide pricing directly from the market meaning fast execution and transparent pricing. A 24/7 multilingual client support service has won recognition through the highly respected Investment Trends awards.

 
Interactive Brokers
Interactive Brokers
$0Bonds
Commodities
Currencies
Indices
Stocks & Shares
CFDs
ETFs
FX
Futures & Options
ISA
Stocks & Shares

Interactive Brokers is one of the world’s leading futures brokers with the ability to offer direct market access to a range of securities. With previous personal experience of trading with this broker, The Armchair Trader knows that they offer excellent platform stability, an excellent range of markets, and solid customer support

If you are based in the UK, spread betting is a tax free alternative to Contract for Differences. You can find our list of spread betting brokers here to get you started.

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