Future Growth Of Volatile Cocoa & Coffee Rests In Emerging Markets

December 08, 2014




Cocoa futures, with a contract size of 10 metric tons, are traded on both the CME and the ICE.

Over 2014, cocoa futures have continued to rise, albeit somewhat choppily. In late September, at $3,371 a ton, they hit a 3 ½-year high. While toward the end of October, they had fallen back to around $3,000 a ton, they were still up 15 percent on the year. However, during the single week ending Oct. 31, they dropped 5 percent, falling 1.6 percent alone that Friday, to end the month at $2,899 a ton.


ICE Cocoa Front Month – Settlement (US$)

Source: ICE


Despite the possible potential for cocoa in the long term, in the short term, if nothing else, the performance of cocoa futures over the past two or more months illustrates just how volatile the futures market in it can be.

In cocoa’s case, the threat to supply (which forced futures up so much at the end of September) was the Scylla of Ebola and the fear among many that it would engulf the cocoa-producing West African nations.

Indeed, fears were such that the International Cocoa Organization (ICCO) itself issued a statement emphasizing that “its thoughts and prayers are with the citizens and governments of three member countries, Guinea, Liberia and Sierra Leone, who are most affected by the Ebola outbreak in West Africa.”

So far, however, these fears have not been realized, and the threat appears to have diminished. This has been reflected in the recent corrections downward in the price of cocoa futures.


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