Cocoa (CC)

The sweet ingredient behind chocolate. Cocoa comes from West Africa and powers a $130 billion chocolate industry.

2-Minute Beginner Summary

Cocoa trees grow in hot, humid climates near the equator. West Africa (Ivory Coast, Ghana) produces 70% of global supply. Cocoa is volatile—weather, disease, and political instability in producer countries all affect prices. Growing demand from Asia is driving long-term growth.

What Is Cocoa?

Cocoa beans are seeds from the cacao tree, processed into cocoa butter (for chocolate) and cocoa powder.

Why CC Matters

Chocolate is a $130 billion industry. Mars, Mondelez, Nestlé, and Ferrero are major buyers. Sustainability concerns affect the industry.

What Moves the Price?

Top 6 drivers affecting Cocoa prices:

West African Weather

Ivory Coast and Ghana produce 70% of cocoa. Drought and disease devastate crops.

Political Stability

Ivory Coast has had civil conflicts. Political risk affects production and exports.

Grindings Data

Quarterly reports on cocoa processing indicate chocolate demand.

Currency Movements

CFA Franc and Ghana Cedi movements affect farmer economics.

Asian Demand Growth

Rising chocolate consumption in China and India.

Sustainability Initiatives

Companies investing in sustainable sourcing may affect supply chain.

Market Structure

Spot vs Futures

ICE trades cocoa in New York. London ICE also has a contract. Physical cocoa trades at differentials to futures.

Contango & Backwardation

Highly volatile, can show extreme backwardation during supply shocks.

Key Exchanges: ICE Futures U.S., ICE Futures Europe

Contract Size: 10 metric tonnes per contract

Seasonality

Tied to West African harvest cycles.

Peak Months: February, March, June, July

Low Months: October, November, December

Main crop (Oct-Mar) harvest pressures prices. Mid-crop (Apr-Sep) is smaller. Pre-harvest period can see price strength.

Macro Sensitivity

Cocoa is somewhat discretionary—chocolate consumption tracks consumer confidence. Dollar weakness supports prices.

USD Sensitivity: negative
Inflation Sensitivity: positive
Growth Sensitivity: positive
Rates Sensitivity: neutral

Stock & ETF Exposure Map

Related Stocks

Related ETFs

Key Calendar & Reports

ICCO Quarterly Report (Quarterly)

Source: International Cocoa Organization. Global supply/demand estimates

European/US Grindings (Quarterly)

Source: Cocoa Associations. Processing activity as demand indicator

Ivory Coast Export Data (Monthly)

Source: CCC. Largest exporter shipments

How to Trade Cocoa

ETFs like NIB offer exposure. Chocolate company stocks provide indirect access. ICE futures are the benchmark.

Frequently Asked Questions

Why is West Africa so dominant?

Climate and soil in Ivory Coast and Ghana are ideal. Together they produce 60%+ of global cocoa.

What is the main crop vs mid-crop?

Main crop (Oct-Mar) is 75% of production. Mid-crop (Apr-Sep) fills the gap. Quality can differ.

What is Harmattan?

A dry wind from the Sahara that can stress cocoa trees in December-February, affecting yields.

What drives chocolate prices?

Cocoa is 10-15% of chocolate bar cost. Sugar, milk, labor, and packaging also matter.

What is sustainable cocoa?

Cocoa grown with environmental and social standards. Certifications like Rainforest Alliance and Fairtrade.

How does El Niño affect cocoa?

El Niño can bring drought to West Africa and excess rain to Southeast Asia, affecting production.

What are grindings?

Cocoa bean processing into butter and powder. Quarterly grindings data indicates chocolate demand.

Why is cocoa more volatile than coffee?

Production is concentrated in fewer countries with more political risk. Supply shocks have outsized impact.

Glossary

Cacao: The tree and raw pods from which cocoa is derived.
Cocoa Butter: Fat extracted from cocoa beans, used in chocolate.
Cocoa Powder: Defatted cocoa used in drinks, baking, and confectionery.
Grindings: Processing of cocoa beans, an indicator of chocolate demand.
Main Crop: Primary harvest season (Oct-Mar) producing most of annual supply.
Mid-Crop: Secondary harvest (Apr-Sep) with smaller volume.
Harmattan: Dry Saharan wind affecting West African cocoa in winter.
CCC: Le Conseil du Café-Cacao - Ivory Coast's cocoa regulator.
COCOBOD: Ghana Cocoa Board - regulates Ghana's cocoa sector.
Differential: Premium or discount for specific origins above/below futures.