* CME Group to also launch cash-settled dollar cocoa contract
* ICE also has plans to introduce a euro cocoa contract (Adds comment from senior market participant)
By David Brough
LONDON, Jan 27 (Reuters) - CME Europe said on Tuesday it planned to launch a euro-denominated cocoa futures contract on March 30, just days before rival ICE Futures Europe introduces a similar contract.
The launch of a cocoa futures contract for physical delivery marks CME Group's entry into deliverable soft commodities.
ICE Futures Europe announced this month it would launch a euro-denominated contract in April.
CME Europe will also launch a cash-settled dollar-denominated cocoa futures contract on March 30 as it seeks to break ICE's current dominance of cocoa futures trading.
ICE currently operates two cocoa futures contracts, one denominated in sterling and the other in dollars.
"The probability is that there won't be the same number of contracts in existence in a couple of years' time. The market will make its choice," said Jonathan Parkman, joint head of agriculture at Marex Financial Limited.
The creation of euro-based contracts is expected to cut currency risks for cocoa processors operating in euro zone countries including Cargill and Barry Callebaut.
The currency of the world's top cocoa grower Ivory Coast, the CFA franc, is also pegged to the euro.
"Many of the leading participants in the cocoa trade and industry would like to see a deliverable cocoa futures contract denominated in euros," said Cees Vermaas, managing director and CEO of CME Europe.
The new dollar-based cocoa contract will enable participants to arbitrage between the London and New York cocoa futures markets.
"Customers will also be able to take advantage of the margin efficiencies available from having both contracts cleared by CME Clearing Europe," CME Group said.
Both new cocoa futures contracts will have the same contract months: March, May, July, September, and December, said Jeffry Kuijpers, executive director, agricultural commodities, CME Group.
Demand for cocoa products, especially chocolate, is expected to grow rapidly, and has the potential to outpace supply through 2020, the CME Group added.
"These and other factors can lead to volatile prices and underscore the need for new contracts to enable global cocoa participants to better manage their risk from origin to finished product," it said. (Reporting by David Brough; editing by Jason Neely and Louise Heavens)