The cocoa exchange traded note has been one of the best performers in the commodities space, with money managers taking record net-long position, but some are starting to caution against the influx of speculative bets.
The iPath DJ-UBS Cocoa TR Sub-Index ETN (NYSEArca: NIB) has gained 19.8% year-to-date.
As of Oct. 22, investors were net-long, or positioned for positive price gains, by 65,466 futures and options, compared to 65,234 contracts a week earlier and the former record of 65,317 on Oct. 8, reports Isis Almeida for Bloomberg.
Macquarie Group points out that prices climbed this year due to a shortage of 173,000 metric tons as consumption outpaces supply and dry weather decimates crops in West Africa, the world’s main growing region.
However, the spike in speculative long positions could topple if the fundamentals turn.