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The Coffee Committee is considering the possibility of making Brazil a deliverable origin on its Coffee “C” futures contract. Before making any final decision on this issue, and in the interest of providing additional transparency to the process by which such decisions are made, NYBOT is seeking to make its consideration of Brazil more widely known and is also soliciting input from any and all interested parties on the possible change.
BACKGROUND AND CURRENT STATUS
The Committee has been considering this issue for several months, and has appointed a smaller Working Group to explore it in depth and make a recommendation to the full Committee. The Working Group has recommended the addition of Brazil as a deliverable origin; the recommendation is being considered by the full Committee, but no decision has yet been taken.
At a recent meeting, the Coffee Committee directed the Working Group to perform two additional studies, and to report the results back to the Committee within the next four months. The studies are:
- Development of a consensus cupping standard for Brazil arabicas via at least 4 cupping sessions to be coordinated with Exchange graders. Trade participation in the sessions, which should take place at least once a month over the next 4 months, will be solicited; and
- A study of the costs to prepare fully-washed, semi-washed and natural arabicas in Brazil.
In the course of its discussion concerning differentials, the Committee discussed the fact that in the past, any time such an origin or delivery port differential was changed such change only became effective for delivery months that did not already have open interest; this meant that such changes took from 18 to 24 months to become effective. The Committee is concerned that this may be too long a delay in implementing such changes in the future, and it directed that staff explore the possibility of changing the mechanism by which differentials for origins and delivery ports are set to provide the flexibility of changing these differentials with less of a delay in implementation.
SUBMIT COMMENTS
If you would like to submit comments regarding the issue of Brazil as a deliverable origin on the “C” contract, and/or on the possibility of speeding up the implementation of future changes to differentials under the contract, please submit them in writing either via email (tbarry@nybot.com) or by regular mail to:
Tim Barry
NYBOT
One North End Avenue
New York, NY 10282
The New York Board of Trade (NYBOT) is the parent company of the Coffee, Sugar and Cocoa Exchange, Inc. (CSCE) and the New York Cotton Exchange (NYCE). Through its two exchanges,
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