Market Overview: Cocoa (CC)

The Cocoa tree is found only in tropical climates, typically not ranging more than 20 degrees from the equator. The fruit of the Cocoa tree appears as pods, primarily on the tree's trunk and lower main branches. When ripe, these pods are cut down and opened and the beans are removed, fermented and dried. Cocoa was originally cultivated by the Aztec Indians in South America, but is now widely cultivated in the tropical nations.

Seasonal Overview:

Cocoa prices tend to follow the harvest cycle of the crop. By January, the Cocoa, which was harvested in September and October, is available on the world market, which tends to weigh on prices at the beginning of the year (January and February). Typically, March sees Cocoa prices flat to slightly higher, as the market tends to work off excessive pessimism. April marks the end of the main crop harvest season and tends to see a final break in prices. With no harvest in May, prices tend to be sideways to strong, again working off "over sold" conditions. June and July see weakness due to mid-crop harvest, while the heat of August tends to buoy prices. September and October are traditionally the worst times of the year for Cocoa prices, as the anticipation of the main crop harvest weighs on prices, while November and December typically see rallies due to harvest delays and the threat of disease.

Most of the major rallies in the price of Cocoa can be attributed to harvest delays or plight and pestilence. The Cocoa plants are most vulnerable to these delays and the forces of nature in May, August, and at the end of the year (November and December).

Cocoa (NYBOT): (High: Aug-Sep//Low: Jun) Cocoa beans ripen from October through August, with two crops typically harvested. The primary producing crop runs from Oct-Mar, with a smaller crop May-Aug. The June low coincides with deliveries against the July contract, the Aug-Sep high with the end of the crop year.

Chart courtesy of Moore Research Center, Inc.