{ "id": "coffee-futures", "url": "https://coffearium.org/entries/coffee-futures/", "license": "CC-BY-4.0", "title": "Coffee futures", "summary": "How the New York arabica and London robusta futures contracts work, how traders and roasters use them to hedge price risk, and what they cannot hedge.", "domain": "trade", "kind": "Concept", "stage": "trade", "topics": [ "history" ], "topicSections": {}, "lang": "en", "status": "verified", "reviewer": "Coffearium verification pass", "lastVerified": "2026-10-16T00:00:00.000Z", "updated": "2026-10-16T00:00:00.000Z", "added": "2026-10-16T00:00:00.000Z", "brief": [ "A coffee futures contract is a standardised, exchange-traded promise to buy or sell a set quantity of exchange-grade green coffee in a set delivery month.10,12", "As of October 2026, arabica trades as Coffee “C” on ICE Futures U.S. (37,500 lb, US cents per lb), robusta on ICE Futures Europe (10 t, USD per t).1,5", "Physical coffee is often priced as futures plus a differential. A futures hedge covers the futures part; the differential (basis) stays a risk.8,11", "According to a 2017 textbook chapter, hedgers (producers, exporters, importers, roasters) use futures to shed price risk; speculators take that risk on and add liquidity.10" ], "quickFacts": [ { "label": "Arabica (New York)", "value": "ICE Futures U.S. Coffee “C” (KC), 37,500 lb, US cents per lb" }, { "label": "Arabica months", "value": "March, May, July, September, December" }, { "label": "Robusta (London)", "value": "ICE Futures Europe Robusta (RC), 10 t, USD per t" }, { "label": "Robusta months", "value": "January, March, May, July, September, November" }, { "label": "Brazil", "value": "B3 arabica 4/5 (ICF), 100 bags of 60 kg, USD per bag" }, { "label": "Specifications as of", "value": "October 2026" } ], "aka": [ "Coffee futures: New York and London", "Coffee C", "Coffee “C” contract", "KC", "Robusta futures", "Terminal market", "Coffee futures market" ], "linkTerms": [ "coffee futures", "futures contract", "futures market", "terminal market", "hedging", "short hedge", "long hedge", "certified stocks", "contango", "backwardation" ], "related": [ "how-a-coffee-price-is-made", "green-coffee-grading", "harvest-calendars", "certifications-and-labels", "eudr" ], "contested": [ "Speculation and price volatility: one 2017 textbook chapter on the economics of coffee states that speculative investment has fuelled market volatility and that short-term speculation is a growing concern11; another chapter of the same book describes the distortions caused by funds as mostly short-lived, with supply and demand still driving long-term trends.10 No study opened for this entry measured the effect for coffee." ], "corrections": [], "sources": [ { "id": "s1", "title": "Coffee C® Futures: contract specifications", "year": 2026, "publisher": "ICE Futures U.S.", "url": "https://www.ice.com/api/productguide/spec/15/pdf", "tier": "A", "tierNote": "Exchange product specification; page dated 23 August 2026", "quote": "The Coffee C contract is the world benchmark for Arabica coffee.", "accessed": "2026-10-16T00:00:00.000Z" }, { "id": "s2", "title": "ICE Futures U.S. Rules, Chapter 8: Coffee “C” Rules", "year": 2025, "publisher": "ICE Futures U.S.", "url": "https://status.ice.com/publicdocs/rulebooks/futures_us/8_Coffee.pdf", "tier": "A", "tierNote": "Exchange rulebook; Rule 8.03 last amended 27 March 2025, effective 15 April 2025", "quote": "A Lot of Coffee \"C\" shall consist of thirty-seven thousand five hundred (37,500) pounds of washed arabica coffee", "accessed": "2026-10-16T00:00:00.000Z" }, { "id": "s3", "title": "Amendments to Coffee “C” Rules: origin differentials (Submission No. 24-6)", "year": 2024, "publisher": "ICE Futures U.S., filing to the Commodity Futures Trading Commission", "url": "https://www.ice.com/publicdocs/regulatory_filings/24-6_Coffee_Rule_Amendments.pdf", "tier": "A", "tierNote": "Exchange filing of 11 January 2024; its letter gives Colombia’s previous premium as 6 cents per lb, while its marked-up Schedule C-2 shows 400 points", "quote": "Kenya and Costa Rica - Differential is being increased to a 10 cent per pound premium, from the current par delivery level.", "accessed": "2026-10-16T00:00:00.000Z" }, { "id": "s4", "title": "Exchange Notice: Vietnam as a deliverable origin for Coffee “C” futures", "year": 2025, "publisher": "ICE Futures U.S.", "url": "https://www.ice.com/publicdocs/futures_us/exchange_notices/Exchange_Notice_Vietnam_Deliverable_Origin_Coffee_20250401.pdf", "tier": "A", "quote": "at a differential of 6 cents per pound under par", "accessed": "2026-10-16T00:00:00.000Z" }, { "id": "s5", "title": "Robusta Coffee Futures: contract specifications", "year": 2026, "publisher": "ICE Futures Europe", "url": "https://www.ice.com/api/productguide/spec/37089079/pdf", "tier": "A", "tierNote": "Exchange product specification; page dated 16 October 2026", "quote": "The Robusta Coffee futures contract is used as the global benchmark for the pricing of physical Robusta Coffee.", "accessed": "2026-10-16T00:00:00.000Z" }, { "id": "s6", "title": "Coffee C® Options: contract specifications", "year": 2026, "publisher": "ICE Futures U.S.", "url": "https://www.ice.com/api/productguide/spec/14/pdf", "tier": "A", "tierNote": "Exchange product specification; page dated 9 May 2026", "quote": "For a serial option, the underlying future is the next Regular futures contract month", "accessed": "2026-10-16T00:00:00.000Z" }, { "id": "s7", "title": "Futuro de Café Arábica Tipo 4/5: ficha do produto", "publisher": "B3 S.A. – Brasil, Bolsa, Balcão", "url": "https://b3.com.br/pt_br/produtos-e-servicos/negociacao/commodities/ficha-do-produto-8AA8D0CC9DBDCB54019DC0DEE49B513B.htm", "tier": "A", "tierNote": "Exchange product sheet; no date on the page", "quote": "100 sacas de 60kg líquidos (equivalentes a 6 toneladas métricas).", "accessed": "2026-10-16T00:00:00.000Z" }, { "id": "s8", "title": "CFTC Glossary", "publisher": "U.S. Commodity Futures Trading Commission", "url": "https://www.cftc.gov/LearnAndProtect/AdvisoriesAndArticles/CFTCGlossary/index.htm", "tier": "A", "quote": "Market situation in which futures prices are progressively lower in the distant delivery months.", "accessed": "2026-10-16T00:00:00.000Z" }, { "id": "s9", "title": "Disaggregated Explanatory Notes (Commitments of Traders)", "publisher": "U.S. Commodity Futures Trading Commission", "url": "https://www.cftc.gov/MarketReports/CommitmentsofTraders/DisaggregatedExplanatoryNotes/index.htm", "tier": "A", "quote": "A “money manager,” for the purpose of this report, is a registered commodity trading advisor (CTA); a registered commodity pool operator (CPO); or an unregistered fund identified by CFTC.", "accessed": "2026-10-16T00:00:00.000Z" }, { "id": "s10", "title": "Trading and Transaction – Market and Finance Dynamics", "authors": "Nadelberg, E.; Polit, J. R.; Orjuela, J. P.; Ranitzsch, K.", "year": 2017, "publisher": "In: Folmer, B. (ed.), The Craft and Science of Coffee, Academic Press, ch. 9, pp. 205–223", "url": "https://doi.org/10.1016/B978-0-12-803520-7.00009-8", "doi": "10.1016/B978-0-12-803520-7.00009-8", "tier": "B", "quote": "Growers and importers tend to be short hedged (sellers) while roasters are long hedgers (buyers).", "accessed": "2026-10-16T00:00:00.000Z" }, { "id": "s11", "title": "Economic Sustainability – Price, Cost, and Value", "authors": "Perez, J.; Kilian, B.; Pratt, L.; Ardila, J. C.; Lamb, H.; Byers, L.; Sanders, D.", "year": 2017, "publisher": "In: Folmer, B. (ed.), The Craft and Science of Coffee, Academic Press, ch. 6, from p. 133", "url": "https://doi.org/10.1016/B978-0-12-803520-7.00006-2", "doi": "10.1016/B978-0-12-803520-7.00006-2", "tier": "B", "quote": "Differentials are not published as a price reference.", "accessed": "2026-10-16T00:00:00.000Z" }, { "id": "s12", "title": "ICE Coffee Markets: Price discovery using global futures markets", "authors": "Farrell, D.", "year": 2019, "publisher": "Intercontinental Exchange, presentation (Global Coffee Platform archive)", "url": "https://archive.globalcoffeeplatform.org/assets/files/Price-Crisis-CTA/GCP-Coffee-Price-Discovery_nov2019_PDF.pdf", "tier": "B", "tierNote": "Presentation by the exchange's own staff, not a rulebook or specification; used for history and plain definitions", "quote": "Grading results published by the Exchange, allowing market to understand deliverable supply for the futures contracts", "accessed": "2026-10-16T00:00:00.000Z" }, { "id": "s13", "title": "Gestion du risque de fluctuations des prix du café (EB 3839/03)", "year": 2003, "publisher": "International Coffee Organization", "url": "https://ico.org/documents/eb3839.pdf", "tier": "B", "quote": "Paris : Marché international des Cafés Robusta de Paris/Le Havre (MATIF)", "accessed": "2026-10-16T00:00:00.000Z" }, { "id": "s14", "title": "Les cafés de l’Union française vus par les importateurs des deux grands marchés métropolitains : Le Havre et Marseille", "authors": "Coste, R.", "year": 1956, "publisher": "ORSTOM (now IRD)", "url": "https://horizon.documentation.ird.fr/exl-doc/pleins_textes/divers18-07/10251.pdf", "tier": "B", "quote": "son nouveau marché à terme (novembre 1954)", "accessed": "2026-10-16T00:00:00.000Z" }, { "id": "s15", "title": "The Weather Risk Premium in Coffee Futures Prices", "authors": "Vizcarrondo, E.; Janzen, J.", "year": 2023, "publisher": "farmdoc daily 13: 237, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign", "url": "https://ageconsearch.umn.edu/record/342495/files/fdd122923.pdf", "tier": "A", "quote": "At the end of July 2021, a frost event in Brazil negatively affected the coffee harvest.", "accessed": "2026-10-16T00:00:00.000Z" } ], "markdown": "## What a futures contract is\n\nA futures contract is a binding agreement to buy or sell a fixed quantity of a commodity in a future month.10 Everything except the price is standardised: quantity, quality, delivery period and the warehouses where delivery takes place.10,12 Buyers and sellers agree only on the price, through the exchange.\n\nBecause every contract is the same, a position can be closed by an opposite trade. A seller of one September contract simply buys one back later. Most positions end this way, and only a small part of trading ends in delivery of coffee.10\n\nA clearing house stands between the two sides. It acts as the buyer to every seller and the seller to every buyer, so traders do not need to trust each other.10\n\n## The two benchmark contracts\n\nArabica coffee is traded in New York as the Coffee “C” contract of ICE Futures U.S. ICE calls it the world benchmark for arabica.1 One contract (a “lot”) is 37,500 lb of washed arabica, quoted in US cents per pound.1,2 That is about 17 tonnes, or roughly 284 bags of 60 kg.10\n\nRobusta is traded in London on ICE Futures Europe. One lot is 10 tonnes, quoted in US dollars per tonne.5 A third contract, for Brazilian arabica, trades on B3 in São Paulo.7\n\nThe futures price is a reference for coffee in general, not for one farm’s lot. A lot is a batch of coffee from one origin and process, traded as a unit. Its price is usually set as the futures price plus a differential: a premium or discount for its origin and quality.11,12 The tool below shows how futures and differential add up to a landed cost.\n\n
\n\n## How a hedge works\n\nA hedge is a futures position taken as a temporary stand-in for a physical purchase or sale.10 It has two legs. When the price of the physical coffee moves, the futures position moves the other way.\n\nAn importer who buys coffee at a fixed price but has not yet sold it loses if prices fall. To protect that stock, the importer sells futures: a short hedge. Growers and importers tend to be short hedgers.10\n\nA roaster who has promised a customer a fixed price for the coming months loses if green coffee becomes dearer. The roaster buys futures: a long hedge.8,10 When the physical coffee is bought, the futures are sold again.\n\n
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    \n
  1. Physical purchase. The importer buys green coffee at a fixed price and holds it unsold.
    2. \n
  2. Futures sale. On the same day the importer sells futures for about the same quantity: the short hedge.10
    3. \n
  3. Clearing house. It is the counterparty to both trades and settles gains and losses every day.8,10
    4. \n
  4. Physical sale. Weeks later the coffee is sold to a roaster at the futures price plus a differential.11
    5. \n
  5. Futures buy-back. The importer buys the futures back, closing the hedge. A loss on one leg is largely offset by a gain on the other.10
    6. \n
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A short hedge in two legs: physical coffee (A) and futures (B), opened together and closed together. Schematic, not to scale.
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\n\n### Example with round, invented numbers\n\nThis example is for illustration only. The prices are invented, not market quotes.\n\n| Step | Physical coffee | Futures (one lot) |\n|---|---|---|\n| June | Buys a lot at 320 ¢/lb (futures 300 + differential 20) | Sells one September contract at 300 ¢/lb |\n| August | Sells to a roaster at September futures + 25 = 275 ¢/lb | Buys one September contract back at 250 ¢/lb |\n| Result | Loss of 45 ¢/lb | Gain of 50 ¢/lb |\n| Net | | +5 ¢/lb, the change in the differential (20 → 25) |\n\nPrices fell by 50 ¢/lb, but the importer’s result depends only on the differential. Had futures risen to 350 ¢/lb instead, the physical sale would have gained 55 ¢/lb and the futures lost 50 ¢/lb: again +5 ¢/lb. On one lot of 37,500 lb, 5 ¢/lb is USD 1,875 (our arithmetic).\n\n## What a hedge does not cover\n\nThe hedge protects against moves in the futures price. It does not protect the differential.8,11 In the example, a differential that fell from 20 to 10 would have left the importer with a loss of 10 ¢/lb.\n\nDifferentials are not published like futures prices. They are negotiated and reflect quality, origin and local supply and demand.11 They are usually steadier than the futures price, but not always.11\n\nMany contracts leave the futures part open at first. Buyer and seller agree the differential, and the price is fixed later against a futures month.10,11 In one textbook example, a cooperative buys from a producer and sells to a roaster. The roaster’s price is set only as a differential over New York.10 A trader who buys and sells on the same open-price basis has matched the futures part on both sides. What remains is the gap between the two differentials (our reading of that example).\n\n## Who trades coffee futures\n\nAccording to a 2017 textbook chapter, traders on a futures market fall into two groups. Hedgers use it to fix prices or reduce risk. Speculators try to profit from price changes and take on the risk the hedgers give away.10\n\nHedgers in coffee are growers, exporters, importers and roasters.10 Speculators include commodity index funds, which only buy, and more active hedge funds.10 Without speculators there would be fewer buyers and sellers at each price, and hedging would be harder.10\n\nCoffee futures prices also react to weather. In Brazil, frosts occur in the May–August winter.15 The price history behind these spikes is in [How a coffee price is made](/entries/how-a-coffee-price-is-made/).\n\n\n\n## Reference values: contract specifications\n\n| Parameter | Coffee “C” (ICE Futures U.S.) | Robusta (ICE Futures Europe) | Arabica 4/5 (B3) |\n|---|---|---|---|\n| Symbol | KC1 | RC5 | ICF7 |\n| Lot size | 37,500 lb of washed arabica1,2 | 10 t5 | 100 bags of 60 kg net (6 t)7 |\n| Price unit | US cents per lb, to two decimals1 | USD per t5 | USD per bag, to two decimals7 |\n| Minimum price step | 0.05 ¢/lb = USD 18.75 per lot1 | USD 1 per t = USD 10 per lot5 | USD 0.05 per bag7 |\n| Delivery months | March, May, July, September, December1 | January, March, May, July, September, November; ten months listed5 | March, May, July, September, December7 |\n| Deliverable coffee | Washed arabica from 20 named origins at par, premium or discount (see chart); Vietnam added from the May 2027 delivery1,2,4 | Robusta of any origin freely available for export; Class 1 at contract price, other qualities at set premiums and discounts5 | Brazilian green *C. arabica*, type 4-25 (4/5) or better, “bebida dura” (hard cup) or better7 |\n| Delivery points | Licensed warehouses: New York District and Virginia at par; New Orleans, Houston, Miami −0.50 ¢/lb; Bremen/Hamburg, Antwerp, Barcelona −1.25 ¢/lb1,2 | Exchange-nominated warehouses in Europe or the USA5 | Warehouses registered with B3, for delivery in the municipality of São Paulo7 |\n| First notice day | Seven business days before the first business day of the delivery month1 | Fourth business day before the first business day of the delivery month5 | – |\n| Last trading day | One business day before the last notice day (seven business days before the last business day of the month)1 | Fourth business day before the last business day of the delivery month, 12:305 | Sixth business day before the last business day of the month7 |\n| Daily price limit | None1 | None5 | – |\n| Settlement | Physical delivery1 | Physical delivery5 | Physical; positions can also be closed before expiry7 |\n\nSpecifications as published by the exchanges, opened on 16 October 2026. Exchanges change their rules; the specification pages are the authority. Unit conversions for comparison (our arithmetic, with 1 lb = 0.45359237 kg): 37,500 lb is about 17,010 kg, and 1 US cent per lb equals about USD 22.05 per tonne.\n\n## Origin and port differentials in New York\n\nEach Coffee “C” lot is priced at the contract price plus or minus fixed points for its growth and its delivery port. One point is a hundredth of a cent: ICE’s 2024 filing describes a change from par to “Plus 1000 pts.” as a premium of 10 cents per lb.2,3\n\nThe schedule changed with the March 2026 contract. The premium for Colombia rose to 10 ¢/lb, Kenya and Costa Rica moved from par to 10 ¢/lb, and Guatemala from par to 5 ¢/lb. The filing gives the reason: to “better reflect current commercial origin differentials”.3 Vietnam becomes deliverable with the May 2027 contract, at 6 ¢/lb under par.4\n\n
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Coffee “C” growth differentials in US cents per lb against the contract price, as of October 2026 (Rule 8, Appendix IV, Schedule C-2); Vietnam applies from the May 2027 contract. Port differentials are added on top.1,2,3,4
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\n\nThese are exchange differentials, fixed in the rules for delivery. Commercial differentials for physical coffee are negotiated between buyer and seller.11 According to a 2017 textbook chapter, washed and semi-washed Brazilian coffees were already the lowest deliverable type at a discount of 6 cents.10\n\n## Grading, certification and certified stocks\n\nCoffee can be delivered against a futures contract only after the exchange has graded it. Certified stocks are stocks that have been inspected and found of deliverable quality.8 ICE publishes its grading results, so the market can see how much deliverable coffee exists.12\n\nFor Coffee “C”, the exchange draws three graders at random from its list of licensed graders. They decide by majority vote whether a sample meets the minimum standard.2 The grade is based on the green coffee and on a cup test; ICE issues a Notice of Certification.1\n\n| Requirement (Coffee “C”, as of October 2026) | Value | Source |\n|---|---|---|\n| Basis grade, most growths | 8 full imperfections | 2 |\n| Basis grade, Colombia | 13 full imperfections | 2 |\n| Rejected | More than 15 full imperfections below the basis of the growth (more than 10 for Colombia) | 2 |\n| Screen size | At least 50% screen 15 or larger; at most 5% below screen 14 | 2 |\n| Cup | At least 6 cups per chop; “free from all unwashed and aged flavors in the cup, of good roasting quality” | 2 |\n| Lot make-up | Bags of the same shipping weight throughout; at most 5 chops per lot (6 when a chop is added to make up a weight deficiency) | 2 |\n| Certificate | Invalid if the coffee is moved to an unlicensed store, or to a licensed store in another port | 2 |\n| Age deduction | 50 points for coffee delivered 121–150 days after the grading certificate; the deduction then grows for every further 30 days | 2 |\n\nA “full imperfection” is the exchange’s unit for counting defects in a sample; how defects are counted is explained in [Green coffee grading](/entries/green-coffee-grading/). The age deductions make old certified coffee worth less on delivery.2\n\nCertified stock can be used as collateral. A trader who holds the warehouse receipt and a hedge against it can borrow against both.10\n\n## Margins and daily settlement\n\nEvery futures position needs a security deposit. Initial margin is the money put up when a position is opened, as a guarantee that the contract will be fulfilled.8 Maintenance margin is the amount that must stay on deposit at all times.8\n\nGains and losses are settled every day. When the price moves against a position, the clearing house calls for a variation margin payment; a margin call asks the holder to top the account up.8,10 In Coffee “C” each 1 ¢/lb move is worth USD 375 per lot (37,500 lb × USD 0.01; our arithmetic). The clearing house can raise margins when markets are volatile.10\n\nMargin calls depend on the whole account, not only on the losing position, and the system assumes that every participant can settle at any time.10 According to a 2017 textbook chapter, hedging tools are open only to those with enough money to pay for them.11 For most producers and exporters, the feasible instrument is a forward contract agreed before harvest.11\n\n## Contango, backwardation and spreads\n\nFutures for different months trade at different prices. The price gap between two months is the spread.10\n\n| Market structure | Definition (CFTC) | What it suggests |\n|---|---|---|\n| Contango | Prices in later delivery months are progressively higher than in the nearest month8 | Holding coffee for later is paid for; carrying charges are the cost of storing a physical commodity over time8 |\n| Backwardation (inverted market) | Futures prices are progressively lower in the distant delivery months8 | The market pays more for coffee now than for coffee later; ICE describes this as a market paying more for near-term supply than forward12 |\n\nA hedger who moves (“rolls”) a position from one month to the next gains or loses the spread. In the example above (our illustration), an importer who keeps the coffee past September would buy back September and sell December. The cost or gain of that roll is the September–December spread.\n\n## Exchange for physicals\n\nHedgers often close a futures position against a physical deal with an exchange for physicals (EFP). The buyer of the cash coffee hands the seller a matching amount of long futures.8 In the textbook hedging example, a roaster who is long futures passes them to the cooperative that delivers the coffee and is short futures; both positions close at one price.10\n\n## Options\n\nAn option gives the right, but not the obligation, to buy or sell a futures contract at a set price, the strike price.8,12 A call is the right to buy; a put is the right to sell.8,12 ICE names calls as a way for coffee buyers to protect against higher green coffee costs.12\n\nCoffee “C” options are American style and cover one futures contract of 37,500 lb.6 Regular options expire in the futures months (March, May, July, September, December). Serial options cover the other months and use the next regular futures month as their underlying.6 They stop trading on the second Friday of the month before the option month.6\n\n## Commitments of Traders\n\nThe US Commodity Futures Trading Commission (CFTC) publishes weekly Commitments of Traders reports. They break down each Tuesday’s open positions in markets where 20 or more traders hold positions above the reporting levels.9 Coffee traders follow them to see what funds and hedgers are doing.10\n\n| Category (disaggregated report) | Who it covers |\n|---|---|\n| Producer/merchant/processor/user | Firms that produce, process, pack or handle the physical commodity and hedge those activities9 |\n| Swap dealer | Firms that deal mainly in swaps and hedge those swaps with futures9 |\n| Managed money | Registered commodity trading advisors, commodity pool operators and unregistered funds identified by the CFTC9 |\n| Other reportables | All other traders above the reporting level9 |\n| Nonreportable | Total open interest minus all reportable positions9 |\n\nThe disaggregated report started on 4 September 2009.9 The older legacy format splits traders into commercial and non-commercial; ICE uses this split in its own charts of Coffee “C” positions.12\n\n## Weather and the futures price\n\nWeather risk enters futures prices before any damage is done. In a 2023 analysis of 13 years of September Coffee “C” futures, pre-harvest September prices were on average higher than prices at harvest time.15 The authors read this as a weather risk premium for Brazil’s May–August frost season; when no frost comes, prices often fall from May to September.15\n\nA frost at the end of July 2021 damaged the Brazilian harvest, and in 2021 prices rose through the trading period of the September contract.15 The authors link the spike to supply and demand shocks in a market with low stocks.15 Earlier frosts and the long-run price series are covered in [How a coffee price is made](/entries/how-a-coffee-price-is-made/). Harvest timing by origin is in [Harvest calendars](/entries/harvest-calendars/).\n\n## History\n\nThe New York contract descends from the Coffee Exchange of the City of New York, where coffee futures first traded in 1882.10,12 According to a 2017 textbook chapter, it was set up after a market collapse and set rules for nine grades of deliverable coffee; natural robusta was not deliverable.10 The same chapter describes a later contract for Brazilian coffee (the “B” contract), which was replaced by today’s “C” contract.10\n\nThe exchange later became part of the Coffee, Sugar and Cocoa Exchange and the New York Board of Trade (NYBOT). ICE acquired NYBOT, which became ICE Futures U.S.12,13\n\nThe London robusta contract was started in 1958 by the Coffee Terminal Market Association of London.10,12 It first called for “Uganda unwashed” robusta and later widened its deliverable types.10 It was traded on the London International Financial Futures and Options Exchange (LIFFE), which became part of ICE.10,12\n\nFrance had its own coffee futures market in Le Havre. A 1956 report on the French coffee trade mentions its “new futures market (November 1954)”.14 In 2003 the International Coffee Organization still listed a Paris/Le Havre robusta market on MATIF among coffee futures markets.13 No source opened for this entry dates the first Le Havre coffee futures trading.\n\n## Open questions\n\n- How large the weather risk premium is, and whether it is stable: the 2023 analysis calls its evidence suggestive, from 13 years of data.15\n- Whether speculation increases coffee price volatility (see Contested).10,11\n\n## Key studies\n\n
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Nadelberg et al., 2017 – Trading and transaction. A textbook chapter by traders and a risk manager on how coffee futures work: hedgers and speculators, a worked hedge between a producer, a cooperative and a roaster, margins and the clearing house, and the three main exchanges.

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In: Folmer (ed.), The Craft and Science of Coffee, Academic Press, ch. 9 · doi:10.1016/B978-0-12-803520-7.00009-8

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Perez et al., 2017 – Economic sustainability: price, cost and value. Places futures in the economics of producers: price volatility, prefinancing, open-price contracts fixed against New York, and the role of negotiated differentials.

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In: Folmer (ed.), The Craft and Science of Coffee, Academic Press, ch. 6 · doi:10.1016/B978-0-12-803520-7.00006-2

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Vizcarrondo and Janzen, 2023 – The weather risk premium in coffee futures prices. Compares September Coffee “C” prices before and during Brazil’s frost season from 2008 onwards. Prices tend to fall from May to September when frost does not come, which suggests the market prices in weather risk in advance.

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farmdoc daily 13: 237, University of Illinois · ageconsearch.umn.edu

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