Cocoa Futures

Market

Cocoa futures are a part of the commodities futures group traded on the InterContinental Exchange in the U.S. Trading is mainly weather and politically-based. With much of the cocoa production occurring in politically unstable areas, political factors have a major influence in cocoa price stability.

History

In 1925 the world's first cocoa bean future was started at the New York Cocoa Exchange. Cocoa futures prices have ranged between about 1000 and 2800 since the early 1980s. Cocoa hit a high near 5200 in 1977. Cocoa crops are susceptible to two main diseases - black pod disease for African crops and a fungus called “witch’s broom” that damaged Brazil's cocoa crop in the 1990s.

Facts

  • Cocoa futures are highly dependent on weather, requiring a hot and rainy climate to thrive. Production is generally confined to areas not more than 20 degrees north or south of the equator.
  • Cocoa is a powder made from the fruit seeds of the cacao tree. About 3 million metric tons of cocoa are produced each year. Supply is limited to West Africa, where cocoa is produced in the Ivory Coast, Ghana, Nigeria and Cameroon, though some of these locations are under scrutiny for violating child-labor laws; and Indonesia, Brazil, Malaysia, Ecuador and the Dominican Republic.
  • Cocoa is mainly consumed in Europe, North America, Japan and Singapore. The U.S. consumes about 13 percent of the world's cocoa; Germany 9.1 percent; France 7.2 percent; and the U.K. 6.8 percent. The U.S. imports cocoa from Latin America; Europe imports from Africa; and Asia imports from Indonesia.

Trading

 

  • Cocoa futures are traded on the ICE Exchange under ticker symbol CC in dollars per metric ton.
  • Cocoa futures prices rarely follow reliable patterns due to political issues, mainly in Africa. These problems usually control short-term price movement.
  • There is a mild seasonal pattern for cocoa futures to move higher from June through August.
  • In late January 2015 CME Group announced the launch of a physically delivered and a financially settled cocoa futures contract. The launch of a cocoa futures contract for physical delivery represents the exchange’s first entry into deliverable soft commodities. The contract was listed on CME Group's European exchange, CME Europe, for first trade date on March 30, 2015.

 

You can learn more about Soft futures by downloading our guide, Free Fundamentals of Trading Soft Futures.

 

Contract Specifications  

Contract SymbolContract UnitPrice Quotation
ICC10 metric tonsdollars per ton
Trading ExchangeTrading HoursTick Value
ICE4:45 - 13:30 (NY)$1/ton = $10

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This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.