Cocoa/USD is a commodity pair that expresses the relationship between cocoa beans and the US dollar. The instrument provides traders and investors access to cocoa bean trading without needing to store and transport physical raw materials.
Cocoa is a highly liquid commodity. This means that there are a large number of buyers and sellers in the market. High liquidity allows traders to open and close cocoa trades quickly, avoiding additional costs. In addition, a large number of trades provide a narrow spread.
The Cocoa/USD pair is a volatile instrument, as its quotes are influenced by many factors. First of all, it is supply-and-demand dynamics. The main application of cocoa beans is chocolate production. The supply level can be affected by changes in the scale of production due to weather conditions, pests, or diseases affecting plants. In turn, changes in consumer preferences for chocolate consumption can affect demand.
In addition, the cost of raw materials largely depends on macroeconomic factors such as exchange rate fluctuations, inflation rates, and the global economic environment. The political situation in exporting countries also plays an important role, as changes in trade policy, military conflicts, and natural disasters affect both the pace of production and logistics. This, in turn, can create a shortage of goods and increase its cost.
Cote d'Ivoire is the world's main cocoa producer, accounting for about 30% of the planet's annual crop. The leaders' list also includes countries in Africa, Asia, and Latin America, such as Indonesia, Ghana, Nigeria, Brazil, Cameroon, Ecuador, Dominican Republic, Malaysia, and Colombia. Most of the imports of cocoa beans come from the Netherlands, the USA, Germany, Belgium, and Luxembourg, Malaysia.
Risk warning: Trading in FX and CFDs entails high risk of losing capital.
