Special Research Topic
Poverty and Development

Project: Price formation on the futures market and the physical market for cocoa

Project Duration

01/2019 - 02/2021 (current)

Commissioned by

German Federal Ministry of Food and Agriculture

Project Team (RWI)

Dr. Gunther Bensch (Chief), Kathrin Kaestner, Prof. Dr. Colin Vance (Chief)


Jacobs University Bremen


This project investigates the determinants of prices for soft commodity cocoa on the futures market and for raw cocoa on the physical markets. The project is structured in two integrated strands. In the first project module, financial mathematical and econometric models based on fundamental and stock market data will be extended by data-driven modelling and evaluated with regard to their predictive power. The resulting models will be used to simulate different scenarios in order to investigate the effects of fundamental- and exchange-based effects on the cocoa production chain under changing regulatory and political conditions. The second strand of the project focuses on marketing structures and price formation on the physical cocoa markets. Literature-based mapping of the production structures in Ghana and Côte d'Ivoire, two major cocoa producers, will be verified and supplemented by qualitative and quantitative case studies in these countries to establish the contextual background for subsequent data analysis. The research design will record the transactions along the value chain and analyze these econometrically using panel methods. This will be complemented by a quasi-experimental observational study among cocoa farmers, which will make it possible to examine the determinants of producer prices and the socio-economic context of farming operations. The synthesis of these research results provides a comprehensive picture of the different pricing and price formation mechanisms on the cocoa futures market and the physical cocoa markets, thereby allowing fundamental questions to be answered on the suitability of the cocoa futures exchange for the risk management of relevant actors in Germany and in the producer countries.