Coffee Futures Trading
Coffee, along with sugar, orange juice and cocoa belongs to the category of futures contracts known a softs. Trading can be particularly volatile for this group of commodities given that they originate from remote and sometimes politically unstable parts of the world.While coffee trades in both London and New York, the greatest volume of trading takes place at the New York Board of Trade (NYBOT).
The two classes of coffee, Robusta and Arabica each have their own futures contract.
Arabica beans make up 60% of the worlds coffee supply. Brazil and Colombia produce one third of this type of coffee and Costa Rica, Mexico, Guatemala and El Salvador, Indonesia, Uganda and Vietnam are also major growers.
Arabica is the major coffee contract for the US market, being traded on the NYBOT.
Robusta as it's name suggests is a stronger flavored type of coffee originating from Africa and Asia. This coffee contract is traded in London, traded on Euronext-LIFFE.
Contract Specifications: The Arabica contract traded on NYBOT represents 37,500 pounds of coffee. The Euronext-LIFFE Robusta contract represents five tons of coffee.
Valuation: Each 1 cent move in Arabica is $375 per contract. Robusta moves in $1 increments per ton ($5 per tick).
Trading Hours: Arabica trades on NYBOT from 9:15 a.m. to 12:30 p.m. Robusta trades from 9:40 to 16:55 London time on Euronext-LIFFE.