Cocoa futures denominated in euros provides ease of access, says CME Group

By Oliver Nieburg contact

- Last updated on GMT

CME Group's cocoa futures contracts to compete with ICE's Liffe
CME Group's cocoa futures contracts to compete with ICE's Liffe

Related tags: Futures contract

CME Group has launched the first euro-denominated cocoa futures contract, which it claims provides improved hedging mechanisms that better reflect the physical cocoa market.

This week the firm launched two cocoa futures contracts – a Physically Delivered Cocoa futures contract (contract code CCP), denominated in euros and a US dollar denominated Cash-Settled Cocoa futures contract.

The contracts will provide competition to the Intercontinental Exchange’s NYSE/LIFFE Futures and Options (London) and ICE Futures US (New York).

In 2010, 16 European organizations signed a letter addressed to the Liffe exchange calling on greater hedge transparency after fund buying allegedly pushed London cocoa futures LCCc2 to a 32-year high.

CME Group announced last year that it planned to launch its first cocoa contract. The company is dominant in corn, wheat and soybeans and said it chose to up its presence in cocoa after requests from existing customers.

The firm’s cocoa futures contracts will be listed on CME Group's European exchange, CME Europe, for first trade date on 30 March, 2015.

CME group said the contract was launched after 18-months of extensive consultation with the international cocoa trade.

The contract will be the first to include pre-payment of delivery-out charges.

According to Reuters, the ICE was considering changing the pound sterling denominated Liffe cocoa futures contract to euros in July last year, soon after CME Group announced it would enter the cocoa market.

Related topics: Commodities, Cocoa & Sugar, Ingredients

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