Chocolate ETNs Look Sweet in a Sour Market | ETF Trends

Cocoa-related exchange traded notes surged Monday as the El Nino phenomenon fueled abnormal weather patterns across the globe and added to crop concerns in top cocoa growers across the Ivory Coast.

On Monday, the iPath Bloomberg Cocoa Subindex Total Return ETN (NYSEArca: NIB) gained 3.8% and iPath Pure Beta Cocoa ETN (NYSEArca: CHOC) rose 3.3% as cocoa futures jumped 3.9% to $2,868.0 per metric ton, its largest single-day jump in three-and-a-half years.

Cocoa prices rose as a week of hot conditions and dry winds across the Ivory Coast growing region risked stunting the development of the upcoming mid-crop harvest, Reuters reported.

The sudden surge in cocoa prices Monday may also be attributed to oversold conditions after cocoa futures declined 14% over the past month, NIB 14.8% lower and CHOC down 13.9%.

“Cocoa’s rallying today on short-covering and the weak dollar,” Nick Gentile, managing partner of commodity trading advisor NickJen Capital, told Reuters. “I think the market was a little shocked that there wasn’t more liquidation in the New York COT (Commitment of Traders report).”