Cargill launches risk management tools for cocoa pricing

by Jeff Gelski
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AMSTERDAM, THE NETHERLANDS – Cargill’s cocoa and chocolate business has introduced three tools that are designed to help its customers manage price risk in cocoa ingredients. The new protective structures are CocoaPacer, CocoaPacer Cap and CocoaRange Cap.

The tools may offer protection within ingredient purchase contracts against sudden increases in cocoa prices, yet preserve the potential benefit of a discount if the price falls before shipment.

“Our CocoaPacer, CocoaPacer Cap and CocoaRange Cap products are the latest addition to our family of risk services,” said Tom King, customer risk manager for Cargill. “They are straightforward, transparent and can be clearly explained. So customers spend less time and energy debating an array of risk management decisions. These pricing structures are embedded in existing physical contracts of our customers.”

The tools should be used as a complement to traditional pricing approaches, according to Cargill.

“Because of continued cocoa price volatility, many food manufacturers are coping with extraordinary uncertainty when managing price risk exposure to cocoa and chocolate ingredients,” Mr. King said. “We feel that, by combining our risk management discipline with our knowledge of the cocoa and chocolate sector, we have developed a consistent and methodical approach to managing the risk that is of real benefit to our customers.”
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