Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our opinions or reviews. Learn how we make money.
Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.
Investing in cocoa: A how to guide
A guide to investing money in cocoa
Updated
Here we discuss how you can invest in cocoa and the risks that come with it.
Compare online brokers to trade cocoa stocks, ETFs and CFDs
3 ways to invest in cocoa
1. Invest in cocoa ETFs
ETFs allow you to invest your money in a range of assets rather than focussing your investments on one or two firms. To find out more, take a look at our guide to ETFs.
ETFs are a fairly accessible way of entering the market and function in a similar way to normal stocks. They are often seen as a more straightforward, and less risky, way of investing your money. Trusting your money to a collection of assets makes your investment more resilient to the fluctuations of the market.
If you are a newcomer to the investment world, ETFs may be something to consider, and due to cocoa’s popularity, there is no shortage of ETFs to choose from.
- ETFs allow access to a larger and more diverse area of the cocoa industry at competitive prices.
- ETFs are often seen as a safer choice for investments, especially if you are a newcomer.
- By investing in the basket of assets that make up an ETF, you sacrifice some of the control you might have had by investing in a single company.
2. Purchase cocoa futures
Buying futures allows you to invest in cocoa stocks at an agreed price to receive at a later point in the future. Whether you make great returns on your investment or lose money depends heavily on the movements of the market.
Futures are direct but risky, vulnerable to market fluctuations they rely heavily on the buyer’s knowledge and a small shot of luck. A system which can punish the buyer, just as easily as rewarding them, market newcomers may want to gain some experience first.
- Futures give you direct ownership over an asset.
- Cocoa futures can reward buyers with solid returns if they approach them with a strong market knowledge and a bit of luck.
- Futures expire if they aren’t used within the agreed-upon period, making them worthless.
- Unpredictability and volatility are part of the nature of the market. Futures are very vulnerable to price fluctuations and making a bad investment can cost a lot
3. Purchase shares in cocoa companies
One rather common way of investing in a commodity is through stocks. Due to cocoas market popularity, there are a variety of companies for you to choose from, and if you are interested in investing in cocoa there are a number of advisors and brokers to guide you through the process.
While they aren’t as risky as futures, investing in stocks still requires some market knowledge, but by buying stocks at their current price you are less vulnerable to market fluctuations. However, if you are looking for a safer investment, ETFs may be a better choice.
- An accessible and conventional way of entering the market.
- You can withdraw from the market at any time.
- A large selection of company stocks available to choose from.
- As a result of its demand and the areas it is sourced, cocoa is a politicised commodity that can be used a bargaining chip during periods of political friction or negotiation. As a result of this cocoa prices can periodically fluctuate violently, making a big impact on your investment.
How much is cocoa worth now?
Is cocoa a safe investment?
Cocoa’s global popularity makes it a massive commodity, and a popular investment on the market. Even so, there are risks involved in any investment, cocoa included:
- Environmental conditions: Cocoa grows under specific weather conditions, if these conditions shift suddenly they can drastically affect crop yield and subsequently commodity supply. Additionally, environmental changes influence pollination and plant growth, once again impacting general supply.
- Political friction: As mentioned above, cocoa is sometimes used as a political bargaining chip to influence international decisions and conflicts. Many of the nations which serve as major cocoa suppliers have only recently found their place on the global market, and rightly want to make the most of this highly-desired commodity.
- Labour: For a long time cocoa harvesting has been reliant on cheap or child labour. Recently, there has been a massive shift towards fairer working conditions and salaries which have increased production costs, meaning cocoa prices have been at their highest since first transitioning from being a luxury to an everyday commodity. However, regardless of prices, the shift towards better welfare conditions is a welcome change.
Frequently asked questions
More guides on Finder
-
How to invest in the BTCC Bitcoin ETF
The world’s first physical Bitcoin ETF has launched onto the stock market. Here’s how to invest if you’re in New Zealand.
-
How to buy Roblox Corporation (RBLX) stock from New Zealand when it goes public
Here’s everything we know so far about the Roblox Corporation IPO.
-
What does the future hold for investments?
Finder speaks with 33 investment experts about what the future of investing might hold.
-
Electric vehicle (EV) stocks to watch and how to invest
We take a closer look at six popular EV stocks and what they have to offer to Kiwi investors.
-
How to invest in the ASX 200
Your simple guide to the S&P/ASX 200, how it works, and how to invest in this benchmark index from NZ.
-
Sharesight review
Is Sharesight the right performance tracker for your share portfolio? Find out in this review.
-
Investing – your options explored
Your simple guide to the different types of investments, how they work, and how to choose the right investments for your needs.
-
What is the S&P 500 and how can I invest in it from New Zealand?
Find out the different ways you can invest in the S&P 500 index from New Zealand.
-
Passive income ideas for New Zealand investors
Looking for an easy way to earn money while you sleep? Investing in shares, peer-to-peer lending and renting out property can all offer the returns you desire.
-
Stake, Hatch or Sharesies – which is best for US stocks?
Which online investment platform is the best choice for Kiwis who want to trade US stocks?
Ask an Expert