Page 24 - MEX-Yearbook-2017

Commodity Insights

Cocoa

Introduction yield of each particular cocoa tree is comparatively low, producing only
There are three main types of cocoa plant from which cocoa beans are four pounds of cocoa each season. Despite this, cocoa has a number of
harvested: Criollo, Forastero and Trinitario. The Criollo plant has the applications in a range of markets, as discussed below.
highest sensitivity of the three varieties, and changes in climate can The main industries involved in cocoa trading are producers of chocolate
dramatically affect its yield. The Forastero, conversely, has a much thicker and chocolate-related products, with around 3 billion pounds of chocolate
skin and so is much hardier, resulting in it being the most popular variety being consumed each year in America. Chocolate is made by processing
in the world. Lastly, the Trinitario is a hybrid of the other two varieties, cocoa powder, and most of the large traders of Cocoa, such as the Archer-
attempting to combine the delicate flowers of the Criollo with the hardiness Daniels-Midland Company, do this themselves. They then sell on the
of the Forastero. The beans from these plants are then divided into 3 processed material to confectioners who market the finished product
deliverable grades (A, B and C) with A and B grades being deliverable at a to consumers. Cocoa is also used in the beauty products industry, as an
premium and C being deliverable at par. ingredient in the manufacture of various lotions and creams.
Cocoa has a number of special features as a commodity. It enjoys high Cocoa production is highest in the Ivory Coast, which when combined with
levels of demand all across the globe, and yet has very concentrated and Ghana and Indonesia accounts for approximately 70% of the global yield
specific production sources. Cocoa plants can only flourish in the regions of cocoa. Other producing areas tend to be centered on Africa and South
that lie within 20 degrees north or south of the Equator. Consequently, America, such as Brazil and Columbia. Malaysia and Indonesia are also
this means that in the right conditions demand can outstrip supply, raising prolific cocoa producers.
prices. Furthermore, the production cycle works on a seasonal basis and the

23 | MEX NEPAL YEAR BOOK 2017