This chapter focuses on three of the tropical agriculturals: cocoa, coffee, and cotton. Sugar is another important tropical agricultural commodity, as are palm oil, orange juice, and other crops. While my company does sugar research now, I avoided it for many years. As far as I could tell, there was not a sugar market per se, but around 125 of them. It seemed that each country's government messed around with sugar. The U.S. government does the most damage, thanks to presidential politics and the money that fuels it. U.S. consumers pay more than twice what they could pay if the U.S. government did not support domestic sugar growers. The international sugar price has traded below 10 cents per pound for many years, rising above it only in 2005 and early 2006. U.S. sugar prices meanwhile are above 20 cents. I have omitted a discussion of sugar from this book, although it is a very interesting market. Cocoa, coffee, and cotton also present interesting opportunities for investors. Each of these markets has a set of dynamics that is moving the price of that crop in its own direction and its own pace.
Everyone knows cocoa as the basic ingredient in chocolate, and that is its major use. Cocoa also appears in some industrial products such as soaps and cosmetics in the form of cocoa butter. Most cocoa comes from West Africa, although the plant is not native to that region, having originated in the Americas.
Most cocoa ultimately is used in the manufacture of ...