beyondbrics

With the world cocoa trade buzzing with activity - and controversy – it might seem the perfect time to launch a new market to get in on the action.

And so it is that Indonesia, the world’s third largest cocoa producer, is staking out a bigger role for itself in the market with the Jakarta Futures Exchange this week launching plans for a September cocoa contract. But even the locals are not sure it will work.

A day after the announcement, the head of the Indonesian Cocoa Association expressed doubt that the plan would attract the big international traders needed for Jakarta to compete against rival international markets. “The traders already have positions in London and New York, so I’m not sure if it will work,” said Zulhefi Sikumbang.

Sikumbang, who took up the top job this month, said cocoa futures could attract local investors, but that if major companies did not join, the market could lack the liquidity needed to survive. “If they are not interested in Indonesian futures trading, I don’t know if it will be active.”

Indonesian production is expected to rise by roughly 75,000 tons to 650,000 tons in 2010.

Cocoa joins gold and crude palm oil futures, which are already traded in Jakarta.