Moscow Stock Exchange Begins Trading In Cocoa Futures With African, Asian and Latin American Producers A Main Beneficiary

The Moscow Stock Exchange (MOEX) has begun trading in cocoa futures contracts, with trading and settlements conducted in Russian Rubles. The cocoa trade desk began operating yesterday (September 24) and reflects an international demand for the product, reflecting the dynamics of the price of cocoa beans supplied from countries in Africa, Asia, and Central and South America. In other words, the Moscow Exchange has begun representing commodities produced in the Global South.

MOEX stated in a press release that “Investors can use futures to expand the possibilities of investment strategies, hedging risks and generating a profit from price fluctuations. Futures contracts will allow market participants to protect their income better from undesirable changes in exchange prices for cocoa beans for those whose activities are related to the production and processing of cocoa.”

The underlying asset of the futures is the cost of cocoa beans on foreign markets. About 70% of the world’s cocoa beans come from four West African countries: the Ivory Coast, Ghana, Nigeria and Cameroon. Of these, the Ivory Coast and Ghana are by far the two largest producers of cocoa, accounting for more than 50% of the world´s cocoa. Other important producers include Brazil, Ecuador, Indonesia, and Papua New Guinea. Brazil is already a member of BRICS, while Cameroon, Ecuador, Ghana, Indonesia and Nigeria have all expressed interest in joining.

The parameters of cocoa settlement futures are contract code COCOA (CC), a minimum contract volume of 10 kg, as well as execution dates in March, May, July, September, and December, respectively.

Maria Patrikeyeva, of the Moscow Exchange Derivatives Market, said that “There is significant interest from market participants in the commodity instruments segment. On the one hand, this is owing to rising raw material prices and increased volatility in the markets, and on the other hand, a steady need to diversify investments.” The Russian Association of Confectionery Industry Enterprises (ASKOND) has said that cocoa bean imports to Russia were estimated at nearly 69,000 tonnes in 2023.

Interestingly, the MOEX contracts being traded are for futures deliveries exclusively to the United States. The US is the world’s fourth largest importer of cocoa with this meaning that Russia is now gaining a foothold in the US consumer market.

The move by MOEX to begin trading in cocoa futures is an interesting development as the exchange typically trades in Russian products. However, Russia’s increasing involvement in trade with African and Latin American countries, as well as the rise of BRICS + grouping has now made Moscow, rather than traditional trade settlement markets in Europe or the United States a preferred choice for Global South producers – who are also willing to have the product priced in Rubles as opposed to euros or dollars. It is a global commodities development trend worth keeping an eye on as global producers start to shift away from Western manipulated currency trade prices.