London, 10 June 2011

An International Cocoa Organization seminar will bring representatives of a number of ICCO member governments up to date with the latest developments on the commodity futures markets. The ICCO’s Seminar on Cocoa Terminal Markets, taking place in London from 13 to 16 June, is to brief policy makers and their advisors on the important role that the terminal markets play in the world cocoa economy, by shifting price risk through hedging, by providing information for storage decisions and by acting as centres for the collection and dissemination of price information.

The Seminar takes place against the background of events in July 2010, when London’s NYSE Liffe cocoa futures market was the subject of much press interest, due to a large position taken by a single market player. The incident raised concerns about the transparency, integrity and efficiency of terminal markets, and led to calls for stronger regulation of that market by the European and UK financial authorities.

In order to assist delegates to understand these market developments, the Seminar will review the various types of contractual arrangements used to trade cocoa, looking in-depth at futures contracts and their trading, before examining the competitive structure of the markets themselves, the role of brokers and other professionals in the markets.

Speakers from both of the world’s major cocoa exchanges—NYSE Liffe as well as New York’s ICE--will provide an insight into the functioning of their markets.

The Seminar will also address the way fundamental factors affect futures prices, and delegates will learn the importance of basis prices, spreads between different delivery months, and their connections with expected spot prices and storage costs, in order to illuminate the way the futures markets work.

The practicalities of using the futures markets, and of employing various hedging strategies to mitigate the impact of any decline in cocoa prices, will comprise another section of the Seminar.  Also included will be a series of practical case studies, suggesting strategies for grower co-operatives, exporters and traders.

The seminar will conclude with a guided visit to the NYSE Liffe cocoa grading room in London.

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