Prices

Cocoa prices mainly respond to cocoa supply and demand factors. International prices tend to follow a long-term pattern linked to the cocoa cycle, which has been estimated to be of over 20 years. During cocoa boom periods there is a supply surplus that will result in falling and then stagnating prices. Consequently, low prices due to overproduction generally have a negative impact on harvesting, encouraging farmers to switch to other crops, a factor which again permits world prices to rise. The cocoa cycle is thus characterised by boom and bust effects.

Prices experienced an important increase in the 1970s, which encouraged production in countries such as Malaysia and Indonesia. However, since the beginning of the 1980s prices have declined. In spite of a modest recovery in the mid 1990s, international cocoa prices are low compared to those prevailing in the 1970s.

World prices and production of cocoa (from 1971/72 to 2005/06)

Source: UNCTAD based on the data from International Cocoa Organization, quaterly bulletin of cocoa statistics

The two principal cocoa exchanges are located in London and in New York. The following graph shows data from the New York Board of Trade (closing price of the 1st position for futures). We can see the short term volatility of these prices in the year 2000.

Cocoa futures prices in the new york board of trade over the 3rd January 1994 - 31st January 2007 period (daily closing data)

Source: UNCTAD based on data from NYBOT

For information purposes only, cocoa futures and options contract specifications at the beginning of 2001 are listed bellow. However, specifications are subject to change. Updated contracts may be directly consulted in the below mentioned links.

New York Board of Trade (NYBOT)

Cocoa futures

Options on Cocoa Futures

London International Financial Futures and Options Exchange (LIFFE)

Cocoa Futures

1 - Where necessary upon tender, a seller may be instructed by the Clearing House to convert a Bulk Delivery Unit into Large and/or Standard Delivery Units, or a Large Delivery Unit into Standard Delivery Units.
2 - Bulk Delivery Units are tenderable at a discount of £20 per tonne to the contract price.
3 - Contact the Exchange to determine which Delivery Areas have Dual Capacity Warehousekeepers (i.e. those nominated for the storage of Bulk Delivery Units as well as Standard and Large Delivery Units).

Options on Cocoa Futures