Coffee: Trading
New York for Arabica, London for Robusta
What this tab covers How and where it is bought and sold: who buys and sells, exchanges and benchmarks, contract types, the big trading houses and how prices are discovered.Arabica trades on the ICE Futures US 'C' contract in cents per pound; Robusta trades on ICE Futures Europe in London in dollars per tonne. Physical coffee is priced as a differential to these futures, adjusted for origin and quality. A few large merchants, such as Neumann, ECOM, Olam and Louis Dreyfus, buy from exporters and supply roasters. Some East African coffee is still sold at auction, as Radetzki & Wårell note. Pirrong reports credible evidence of squeezes in coffee futures, among other markets.
Where it is bought (buyers)
- Roasters and soluble makers in the US, Germany, Italy, France, Switzerland and Japan buy green coffee from trading houses or direct from exporters
- Indian soluble plants (CCL Products, Tata Consumer, Nestle India) buy domestic robusta and import Vietnamese and other robusta for re-export
- Specialty roasters buy single lots at quality premiums
Where it is sold (sellers)
- Brazilian cooperatives and exporters ship from Santos
- Vietnamese exporters ship robusta from Ho Chi Minh City
- Colombian exporters and the Colombian Coffee Growers Federation sell washed arabica
- Indian curers and exporters in Karnataka sell mainly to Italy, Germany and Belgium (the EU takes about 60%)
Exchanges and benchmarks
| Venue | Contract | Notes |
|---|---|---|
| ICE Futures US | Coffee C (arabica), 37,500 lb, US cents/lb | world arabica benchmark; deliverable from many washed origins against certified stocks |
| ICE Futures Europe | Robusta coffee futures, US$/t | world robusta benchmark |
| B3 (Brazil) | Arabica coffee futures | local hedging in Brazil |
| India | no coffee futures | Indian prices are set as differentials to ICE; the Coffee Board publishes indicative prices |
Contract types
- Price-to-be-fixed (PTBF) contracts: a differential over an ICE futures month, with the futures leg fixed later
- Outright fixed-price contracts for specialty lots
- Green Coffee Association (GCA) and European Coffee Federation (ECF) standard contracts
- Roaster supply agreements with trading houses, often with certification premiums (Rainforest Alliance, Fairtrade, organic)
Top trading houses
- Neumann Kaffee Gruppe
- ofi (Olam Food Ingredients)
- ECOM Agroindustrial
- Sucafina
- Volcafe (ED&F Man)
- Louis Dreyfus Company
- Touton
How prices are discovered
- ICE Coffee C and London robusta settlement prices
- Physical differentials reported by exporters, brokers and price reporters
- ICO Composite Indicator Price and group indicators
- Coffee Board of India indicative prices for Indian grades