If You Bought This Sweet 'Igeot,' You Earned More Than Bitcoin

Kakao Soars 185% Since Early Year
Steeper Rise Than Bitcoin Price

If you had invested in cocoa raw material commodities registered on the New York Mercantile Exchange (NYMEX) earlier this year, you could have earned higher investment returns than with Bitcoin. This is due to the sharp rise in commodity prices caused by failed cocoa farming resulting from climate change.

On the 23rd (local time), the U.S. financial media outlet The Wall Street Journal (WSJ) reported that cocoa prices reached an all-time high of $12,565 per ton (approximately 18.25 million KRW) last week. This represents a 185% surge compared to the beginning of the year, marking a steeper price increase than Bitcoin’s 128% rise during the same period. If you had invested in cocoa futures instead of Bitcoin at the start of the year, you would have recorded a much higher return than cryptocurrency investors.

Chocolate. Pixabay

The cause of the price surge lies in the sharp decline in supply. Cocoa is particularly sensitive to climate change; if there is too much or too little rainfall in the production areas, the pods do not develop. Currently, about half of the world’s cocoa is cultivated in the African countries C?te d'Ivoire and Ghana. This year, excessive rainfall in these regions led to crop failures, while another growing area in West Africa suffered damage due to drought.

Cocoa is not the only commodity experiencing a price surge. Coffee rose 73% to $3.34 per pound (0.45 kg) compared to the beginning of the year, and orange juice increased by 69%. All of these are crops sensitive to climate conditions.

Commodity traders analyze that prices are likely to continue rising. Oran van Dort, an analyst at Rabobank, told the media, "Harvests are poor due to bad weather," and added, "It is difficult to expect production increases next year as well." However, he also advised individual investors not to invest hastily in the commodity market. Analysts warned, "The commodity market is highly volatile" and "very risky."

He further added, "Because cocoa is a lesser-known commodity, people who are unaware may not be interested, but for traders, it is one of the most interesting commodities."

Commodities have previously attracted attention among general investors. In early 2022, when concerns about inflation were rising, a so-called "breakfast" exchange-traded fund (ETF) was launched in the U.S. and gained attention. The breakfast ETF tracks the prices of three major commodities that Americans commonly consume for breakfast: bacon (pork), coffee, and bread (wheat). This was due to the sharp rise in inflation rates, which caused the prices of these commodities to soar.