ICE contracts on 10 metric tonnes of cocoa beans, quoted in US dollars per tonne, with a $1 tick worth $10.
Supply is extraordinarily concentrated: Ivory Coast and Ghana together produce about 60% of the world's cocoa, so West African weather, disease and government pricing policy dominate the market. Trees are old, replanting is slow, and demand from chocolate manufacturers is famously price-insensitive.
That combination produced the most extreme commodity move of recent years: cocoa roughly quadrupled between late 2023 and mid 2024 on black pod disease and harmattan winds, with margin requirements rising repeatedly and liquidity collapsing as participants were forced out.
Example: cocoa at $8,000 a tonne is $80,000 per contract. In 2022 the same contract was worth $24,000. A trader short one contract through that move lost $56,000 on a position whose initial margin began around $2,000.
Original diagrams for the ideas on this page. Illustrative, not real market data.
Margin and leverage. A $5,000 deposit can control a $100,000 position, which is 20:1 leverage. Because the loss is measured on the full $100,000, a 2.5% move against you halves the deposit and brings a margin call, and a 5% move uses all of it.
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