Cacao Price

What is cacao?

In its purest form, cacao beans are derived from the pods of the Theobroma cacao fruit tree. This cacao tree is harvested and planted plentiful in Southern and Central America. After harvesting the cacao beans, it can be processed in different forms. They represent the products that you can find in the stores eventually. All forms of (raw) cacao can be found in a huge variety of recipes.

Production of cacao

The cacao trees where the pods, or cacao beans, are being harvested in numbers can be found mostly in Southern and Central American countries. Some examples are Nigeria, Ecuador, Indonesia, the Dominican Republic, Ivory Coast and Malaysia. When we talk about these countries, we talk about the “cacao belt”, because these countries are usually within 20 degrees of the equator. That is where the producing countries can be found. Ivory coast is the largest producer of cacao beans in the world. They produce over 2 million tonnes of cacao. Of the 26 million people that live in Ivory Coast, about 6 million people work in the cacao industry. It is a big shocking to note, that the average cacao farmer only earns about 97 cents a day. That is way below the poverty line of the world bank of $1.90 per day.

What do cacao beans look like?

Cacao beans come from the Theobroma fruit tree. The beans (technically seeds), grow in pods. These pods are surroudned by a white fleshy fruit flesh, called the Baba. The cacao bean grows best in warm, tropical climates, but needs a lot of rain too. Cacao trees cannot get too much sun or too much shade, which is why some larger fruit trees, like mango trees, are usually added to the plantation. It takes about 5 years before a cacao tree is fully grown and starts producing pods. The average cacao tree produces about 30 to 40 pods per year. These pods are harvested about twice yearly and vary in color. They can be green, orange, yellow or red, depending on the species of cacao tree. Lik grapes to wine, cacao beans can have different tastes. The largest taste differences come to fruition when the tree differs, but also the location where the bean is cultivated.

Advantages of cacao

Chocolate as superfood? Yes, it is true. Raw cacao is a powerhouse under the nutrients. It is namely full of antioxidants (even more than blueberries and goji). But also fiber, magnesium and protein can be found in raw cacao. That is a huge advantage to cacao!

Why does chocolate make us so happy?

The positive energy that chocolate, or cacao, brings is because of the theobromine in cacao. It is an alkaloid that is responsible for the stimulating effect of cacao. Response from the body is that it stimulates the heart, widens blood vessels and lowers blood pressure. Compared to caffeine, theobromine has a softer energy and lasts longer. People also experience less of a dip in energy afterwards. The positive effect of cacao is that it makes us happy, reduces stress and increases focus. Our happy hormones are triggered by Fenylethylamine (PEA), which creates endorfine, dopamine and noradrenaline.

Invest in cacao

There are different ways to trade cacao. But why do people invest in cacao? The most common reason is diversifcation of portfolio and aiming for the growing demand of cacao. Raw materials like wheat, corn or sugar create diversification of your porftolio. Cacao has generally a low correlation with any others and offers protection during times of inflation.

Is it wise to invest in cacao?

There are a couple reasons to underline the expected growth of cacao. We like to explain them more to you>

• More wealth
• Health food
• Western taste of chocolate

More wealth

Because many countries have increasing wealth, more western food habits will be taken over. Chocolate is seen as a luxury product. If the wealth increases, it is likely that the demand for chocolate will rise too.

Health food

< Dark chocolate is considered a healthy food. Because it is rich in antioxidants, the cholesteral lowers and offers protection against cancer, the demand for cacao rises. When the healthy eating habits increase globally, the demand for cacao can increase strongly.

Western taste chocolate

The perceived health advantages of pure chocolate bring the product a broader market. Just like the sweet tooth among consumers, the chocolate consumption in Western economies show no signs of lessening the use of chocolate.

Risks of trading cacao

Like the many advantages of trading cacao, there are also risks that you have to take into account:

• Health – obesity
• British pound
• Over supply

Health – obesity

There is a global concern for obesity in many western countries. Because chocolate has a high percentage of fat, this product will be avoided more often. In particular milk chocolate contains large amounts of sugars like fat.

British pound

The power of the British pound has an effect on the price of cacao. In some markets this can lower the price of cacao.

Over supply

When there is an over supply of cacao, this can put pressure on the price. If Western African cacao producing countries reach a political stability and improve their production facilities, the cacao production might increase and the prices can drop.