Functioning of the Terminal Markets for Cocoa
The terminal markets for cocoa in London and New York play a very important role in the development of prices of cocoa for the entire world. London and New York terminal markets have the role of a standard for the paid prices. If the value of cocoa in these two terminal markets increase, the rate paid to cocoa’s producers increase; if prices in these terminal markets decrease, traders react by paying smaller prices to producers. The terminal markets offer an instrument for the market partakers to protect against price risks, when they are long or short in the physical cocoa market.
The terminal markets for cocoa in London and New York play a very important role in the development of prices of cocoa for the entire world. London and New York terminal markets have the role of a standard for the paid prices. If the value of cocoa in these two terminal markets increase, the rate paid to cocoa’s producers increase; if prices in these terminal markets decrease, traders react by paying smaller prices to producers. The terminal markets offer an instrument for the market partakers to protect against price risks, when they are long or short in the physical cocoa market.
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