CME Group spills beans on new cocoa contract

The Chicago-based firm will launch a cocoa contract to compete with ICE’s Liffe on the London futures market.

Transparency​

Jeffry Kuijpers, executive director of agricultural commodities, told ConfectioneryNews: “There have been some industry events over the last 12-18 months which have prompted a lot of those customers to welcome someone else to have a look at the cocoa derivatives industry.”​

In July 2010, 16 European industry players complained to Liffe of market distortion and lack of transparency. Concerns were raised over monopoly power abuse by exchange-registered warehouses. See HERE.​

ICCO reacts​

Jean-Marc Anga, executive director of the International Cocoa organization (ICCO), welcomed the addition of the CME group during a press conference at the World Cocoa Conference last week.

“We all remember a couple of years ago the events in the London market that created some suspicion about transparency in terms of functioning.​

“For us as an organization, market efficiency and market transparency, these are key features that we believe will contribute to providing remunerative incomes for farmers.”​

“In this respect having one more player in addition to the one player that we, in effect, have is good news."​

No specs yet​

The CME Group is dominant in corn, wheat and soybeans and said it chose to up its presence in cocoa after requests from existing customers.

“There are a lot of regulatory approvals and internal things we need to work through, so there’s very little we can share on the exact specs,” ​said Kuijpers.

“What we have communicated is that we a committed to the cocoa market to try improve upon the current offering or at least provide something that’s competing.”​

“There are no timelines – just a strong commitment to become active in the cocoa sector.”​