Cocoa ETNs Continues Crushing It

In an otherwise glum year for commodities, particularly soft commodities, at least one exchange traded product has stood tall. At the start of trading Tuesday, the iPath DJ-UBS Cocoa TR Sub-Index ETN (NYSEArca: NIB) was sporting a year-to-date gain of 22.5%.

The ETN is up more than 3.5% since it was highlighted on September 18. Recent data from the International Cocoa Organization (ICCO) indicate cocoa supplies will be in deficit for the current crop year after running surpluses in three of the previous four crop years. [Cocoa ETN Looking Sweet]

On Tuesday, NIB jumped to an almost two-year high on reports of foul weather in West Africa, the largest cocoa-growing region in the world. In the year started Oct. 1, cocoa output will trail demand by 173,000 metric tons, followed by a shortage of 113,000 tons the next season, Bloomberg reported, citing Macquarie Group estimates.

West Africa includes Ivory Coast and Ghana, the largest and second-largest cocoa producers in the world. Bad weather could be good news for NIB, which has already trounce soft commodities such as coffee, corn and sugar this year. As the chart below indicates, NIB has destroyed rival ETNs tracking the aforementioned commodities.

ETF Trends editorial team contributed to this post.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.