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Coffee & Cocoa

In the 15th century, Kiva Han opened its doors in Constantinople.  The first coffee house was born.  Originally cultivated in the hills of Ethiopia for thousands of years, the beans developed a following in the Ottoman Empire.  200 years later, in 1629, coffee made its way to Europe when the first cafés opened in Venice.  Coffee beans are a commodity priced in pounds, with the current average price floating around $1.65 per pound.

The cocoa bean has a fascinating history dating back to the Olmec Indians around 1000 B.C.  In ancient Aztec culture, the beans were revered and consumption was limited to the ruling elite.  In the 16th century, Spanish explorer Hernando Cortez recorded cocoa usage by Montezuma, and beans began making their way back to Europe.  The Spanish began adding sugar and flavorings such as vanilla to sweeten their cocoa beverages.
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In 17th century Europe, the first chocolate house opened in London, the eating of solid chocolate was introduced, and bean prices dropped from $3 per pound to a level in which the masses could enjoy the delicacy.  In 18th century America, John Hanan and Dr. James Baker built the continent's first chocolate mill.

Chocolate Costs Soar on Higher Bean Prices

(23 Sep 13)  Consumers around the world are embracing dark chocolate, and the effect is reverberating throughout the supply chain.  Global cocoa supplies have been shrinking, making prices rise, because of this new-found sweet tooth.  In the United States, chocolate prices are expected to hit a 45% premium over what they were just six years ago.

In addition to the increased demand, cocoa beans, which are roasted and ground to make chocolate, are in shorter supply thanks to unusually dry weather in West Africa, the region where 70% of the beans are produced. Cocoa is traded on the futures market in the U.S. and is measured at a per-ton rate.  As of last Friday, the price was $2,608 per metric ton for December contracts.  The cocoa futures market is roughly $5.5 billion in size, and investors are betting big that the consumption trend will continue to march higher as emerging markets produce more discretionary income for citizens.  

Americans have been gravitating toward the darker variety of chocolate, which uses more cocoa beans than milk, because of the touted health benefits.  Marketers have been quick to pick up on the trend, making a larger variety of dark chocolate products (such as berry-filled) and taking up more space in the baking and candy aisles of grocery and health-food stores.  Expect prices to stay strong between the peak Halloween to Easter holiday period.  In addition to trading futures contracts, investors can play the cocoa trade using the iPath DJ-UBS Cocoa ETN, symbol NIB.  
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Content copyright 2024, Penn Wealth Publishing, LLC.  All rights reserved.

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Any opinions expressed are those of Penn Wealth Publishing, LLC and are current only through the date posted.  We reserve our First Amendment right to use parody, sarcasm, satire, and irreverent humor to analyze the current state of business, finance, domestic issues, and global affairs; and to speak freely, outside the zeitgeist of political correctness.  These views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed.  Past performance is no guarantee of future results.  Always consult your investment professional before investing any money. All attempts to ensure accuracy in the data provided have been made, but always verify at the source before investing. This site is for informational purposes only; Penn Wealth Publishing, LLC is not responsible for any losses incurred. 

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  • Home
  • News Headlines
  • The Penn Portfolios
  • Contact
  • Blog
  • Financial Terms & Concepts
  • Art & Collectibles
  • Cash & Fixed Income
  • Commodities
    • Coffee & Cocoa Beans
    • Grains
    • Sugar
  • Communications Services
    • Interactive Media & Services
    • Media & Entertainment
    • Telecommunication Services
  • Consumer Staples
    • Beverages, Tobacco, & Cannabis
    • Drug Retail
    • Food & Staples Retailing
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  • Consumer Discretionary
    • Automotive
    • Consumer Electronics
    • Education & Training Services
    • Homes and Durables
    • Hotels, Resorts, & Cruise Lines
    • Leisure Equipment, Products, & Facilities
    • Restaurants
    • Multiline Retail
    • Specialty Retail >
      • E-Commerce
    • Textiles, Apparel, & Luxury Goods
  • Currencies & Forex
    • Cryptocurrencies
  • Economics
    • Economic Outlook
    • Demographics & Lifestyle
    • Education & Training
    • Goods & Services
    • Happiness Index
    • Housing
    • Supply, Demand, & Prices
    • Work & Pay
  • Energy
    • Energy Commodities
    • Energy Equipment & Services
    • Exploration & Production
    • Integrated Oil & Gas
    • Oil/Gas Refining, Storage/Transport
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