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Cocoa is the Latin name for Theobroma which essentially means ‘food of the gods’. This crop played a particularly important part in the South American cultures. When cocoa was newly introduced to people, the Mayans used to use cocoa to create a ritual beverage that would be shared amongst betrothal and marriage ceremonies. This created one of the first links and associations with chocolate and romance.
By the mid 1600s the cocoa beans made great popularity in France and was praised as a delicious, healthy food which was predominately enjoyed by the rich. One Frenchman decided to open London’s first hot chocolate shop and by the 1700s these ‘chocolate houses’ become a more and more popular and common sight in England. Today people around the world consume over 3 million tons of cocoa beans a year and have these beans in various different forms. Throughout the development of cocoa beans, there has always been one thing that has remained the same throughout the years, chocolate. Chocolate has never seemed to lack in flavour as it always seems to have a keen group of followers who love the food. The World Cocoa Foundation and its other partners help to protect and ensure that these valuable beans are kept to enjoy for future years to come.
Despite cocoa beans having very limited uses, it is primarily used in the production of chocolate whereby the market for this resource is huge. Cocoa may not be as high of a demand as some of the other mentioned commodities, but is a good investment for short periods of time as prices tend to increase quicker in shorter periods.
There are 2 main ways in which investors can trade, ETFs and Futures. Cocoa ETFs (exchange-traded fund) allow for cocoa exposure via exchange-traded products which in turn allows investors to lower their trading activity and to position maintenance. This is down to the exchange-traded structure being quite ideal for those who take interest and value in the liquidity and transparency of the investment. European investors will tend to have additional opportunities when trying to gain exposure to cocoa through exchange-traded products. ETF Security also offers in delivering leveraged and inverse exposure. On the other hand, cocoa futures is when the investors who are looking for exposure to cocoa have the option to invest in futures, standardised contracts to either buy or sell a certain asset at a particular price and date in the future. Cocoa futures are mainly traded via New York Mercantile Exchange (NYMEX) having prices quoted in U.S dollars and cents per pound. They are also traded on the ICE, using the symbol CC.
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