Commodity Fundamentals: How to Trade the Precious Metals, Energy, Grain, and Tropical Commodity Markets

CHAPTER 15

Cocoa

OVERVIEW

Cocoa's origins are thought to have been in the Amazon basin, from where it spread to Central America and Mexico. The Maya considered cocoa to be food of the gods; Aztecs used cocoa seeds as currency. Christopher Columbus was the first European to discover cocoa beans in the late 15th century. The beans did not become popular in Europe until some 20 years later, however, when Hernando Cortes sent cocoa beans, along with Aztec cocoa recipes, back to Charles V, the king of Spain. Hot cocoa became popular with the Spanish aristocracy, who planted beans in Spain's overseas possessions, thereby establishing a thriving industry.

By 1828, a cocoa press had been developed that allowed for the development of a new cocoa product—cocoa butter. Later in the 19th century, around 1879, the Swiss developed the cocoa products that have become for many a favorite treat: solid chocolate and milk chocolate. Today the chocolate market is the biggest consumer of cocoa beans, accounting for about two-thirds of world bean production, while cocoa butter, used in the manufacture of tobacco, soap, and cosmetics, uses roughly one-third of world production. Cocoa cake, cocoa liquor, and cocoa powder also utilize some market share.

Cocoa is a mild stimulant due to the presence of an alkaloid (theobromine) that is closely related to caffeine. Its food value is high, containing as much as 20 percent protein, 40 percent carbohydrate, and 40 percent fat.

Cocoa grows on trees in hot, ...