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Cocoa Futures Trading Basics
Cocoa futures are standardized, exchange-traded contracts in which the contract buyer agrees to take delivery, from the seller, a specific quantity of cocoa (eg. 10 tonnes) at a predetermined price on a future delivery date.
Cocoa Futures Exchanges
You can trade Cocoa futures at NYSE Euronext (Euronext) and New York Mercantile Exchange (NYMEX).
Euronext Cocoa futures prices are quoted in pounds per metric ton and are traded in lot sizes of 10 tonnes .
NYMEX Cocoa futures are traded in units of 10 tonnes and contract prices are quoted in dollars per metric ton.
| Exchange & Product Name | Symbol | Contract Size | Initial Margin |
| Euronext Cocoa Futures (Price Quotes) | C | 10 tonnes (Full Contract Spec) | GBP 1,350 (approx. 7%) (Latest Margin Info) |
| NYMEX Cocoa Futures (Price Quotes) | CJ | 10 tonnes (Full Contract Spec) | USD 2,700 (approx. 11%) (Latest Margin Info) |
Cocoa Futures Trading
Consumers and producers of cocoa can manage cocoa price risk by purchasing and selling cocoa futures. Cocoa producers can employ a short hedge to lock in a selling price for the cocoa they produce while businesses that require cocoa can utilize a long hedge to secure a purchase price for the commodity they need.
Cocoa futures are also traded by speculators who assume the price risk that hedgers try to avoid in return for a chance to profit from favorable cocoa price movement. Speculators buy cocoa futures when they believe that cocoa prices will go up. Conversely, they will sell cocoa futures when they think that cocoa prices will fall.
Related Articles
- Buying Cocoa Futures to Profit from a Rise in Cocoa Prices
- Selling Cocoa Futures to Profit from a Fall in Cocoa Prices
- Cocoa Options Basics
- Cocoa Call Option Trading Basics
- Cocoa Put Option Trading Basics
- Hedging Against Rising Cocoa Prices with Cocoa Futures
- Hedging Against Falling Cocoa Prices with Cocoa Futures
How to Start Trading Cocoa Futures
To buy or sell cocoa futures, you need to open a trading account with a broker that handles futures trades. Most online brokerages out there only deal with stocks and stock options. Only a few such as optionsXpress lets you trade futures and futures options as well. optionsXpress also provide a virtual trading platform where beginners can try out futures and options trading in real market conditions without using real money.
