LONDON — Consumers around the world have developed an increasing taste for chocolate. Cocoa demand has been on the rise in Brazil, Eastern Europe and India, and according to the International Cocoa Organization (ICCO) demand could surpass production by one million tonnes in the next five years.
Cocoa has grown to a €14.7 billion industry while production in the Ivory Coast and Ghana, which account for 60 percent of the world's cocoa, is declining. This, among other factors, can lead to volatile prices in the cocoa market and a need for cocoa industry participants to better manage their risk from origin to finished product.
In response to these fundamentals and industry demand for improved hedging mechanisms, CME Group expanded its product suite to include Cocoa futures and options contracts on its European exchange, CME Europe, earlier this year. Since launch customers have traded more than 10,000 Cocoa futures contracts, averaging up to 100 lots per day. Open interest in these contracts surpassed 1,000 on 25 June, and a record 465 contracts traded on 24 August.
Keeping up with the World's Growing Taste for Chocolate, highlights the supply and demand fundamentals that can have an impact on cocoa prices, as well as a number of unique features built into CME Europe's Cocoa contracts to offer market participants enhanced risk management capabilities.
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As the world's leading and most diverse derivatives marketplace, CME Group (www.cmegroup.com) is where the world comes to manage risk. CME Group exchanges offer the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate. CME Group brings buyers and sellers together through its CME Globex® electronic trading platform, its trading facilities in New York and Chicago, and through its London-based CME Europe derivatives exchange. CME Group also operates one of the world's leading central counterparty clearing providers through CME Clearing and CME Clearing Europe, which offer clearing and settlement services across asset classes for exchange-traded contracts and over-the-counter derivatives transactions. These products and services ensure that businesses everywhere can substantially mitigate counterparty credit risk.
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Source: CME Group
