Cargill Takes Aim at Cocoa Price Volatility

September 13, 2013

The company’s new risk management tools are designed to help customers as they price their cocoa ingredients.

Cargill (Amsterdam, The Netherlands) has introduced three new tools for managing cocoa price risks to its portfolio of Price Risk Services to help protect new and existing customers against sudden increases in cocoa prices, yet preserve the potential benefit of a discount if the price falls before physical shipment:

  • CocoaPacer guarantees the average market price, helping customers keep pace and diversify their pricing decisions.

  • CocoaPacer Cap guarantees a price at or below a cap level and establishes maximum price protection upfront while retaining the potential benefit of a discount.

  • CocoaRange Cap provides a firm price cap to establish a maximum price and the benefit of a fixed rebate if the market trades within a particular range.

Tom King, Cargill’s customer risk manager, explained that CocoaPacer, CocoaPacer Cap, and CocoaRange Cap are built on Cargill’s long history of trading agricultural commodities, and were “straightforward, transparent” tools help customers “spend less time and energy debating an array of risk management decisions.”

The new tools are built into existing customer contracts and are meant to be used in concert with traditional pricing approaches.

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