The cocoa market – uptrend

2015-07-21 10:10:50

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Stronger US Dollar is pushing the prices of most commodities down as everyone expects the US interest rates to go higher this year. There are though some commodities that do not drop – cocoa is certainly one of them. The financial instruments that are basing their value on the cocoa prices are beating the S&P index significantly during the last months.

Dow Jones-UBS Cocoa Total Return Sub-Index ETN (NIB) is in the medium-term uptrend: 24% above S&P in 4 months (a relative trend with beta value);

Pure Beta Cocoa ETN (CHOC) is also in the medium-term uptrend: 20% above S&P in 3 months (a relative trend with beta value).


Charts provided below.


The main factor that shapes the prices of coca is of course demand for the products, which use this commodity in production, e.g. chocolate. There are also many other aspects that influence the cocoa prices and keep the uptrend or downtrend for a while. The Ebola virus from the previous year is a good example. The Ebola spread in the West Africa and covered Ghana and The Ivory Coast which are responsible for more than 50% world production of the cocoa. As a result the cocoa prices soared during the Ebola panic. At the moment El Nino is keeping the cocoa prices high, as it negatively influencing crops worldwide, also Ghana is having some problems with the cocoa production this year.


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