What Are Coffee Futures?

There is a well-developed and very liquid market for coffee futures; though designed to help producers hedge against price fluctuations, these contracts can be used by investors looking to add coffee to their portfolio or speculate on a short-term price fluctuation.

The Coffee C contract is the world benchmark for Arabica coffee. Futures contracts traded on the ICE price physical delivery of exchange-grade green beans, from one of 19 countries of origin in a licensed warehouse to one of several ports in the U. S. and Europe, with stated premiums/discounts for ports and growths. ICE contracts are for 37,500 pounds of beans, and contracts are listed for March, May, July, September, and December.

Coffee futures are also traded on the New York Mercantile Exchange, with prices quoted in U.S. Dollars per pound. A single contract represents 37,500 pounds of cotton with a minimum fluctuation of $0.0005 per pound. Trading is conducted in the March, May, July, September, and December cycle for the next 23 months. All contracts are subject to the rules and regulations of NYMEX.

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