COFFEE (NCF)
Today, coffee is one of the most popular beverages worldwide. Due to its caffeine content, coffee can have a stimulating effect in humans.
While coffee is not technically a commodity (it is fresh produce; its value is directly affected by the length of time it is held), coffee is bought and sold by roasters, investors and price speculators as a tradable commodity.
Coffee ingestion on average is about a third of that of tap water in North America and Europe. Worldwide, 6.7 million metric tons of coffee were produced annually in 1998–2000, and the forecast is a rise to seven million metric tons annually by 2010.
Brazil remains the largest coffee exporting nation, but Vietnam tripled its exports between 1995 and 1999, and became a major producer of robusta beans. Indonesia is the third-largest exporter and the largest producer of washed arabica coffee.
Futures contracts for robusta coffee are traded since 2007, on the New York ICE exchange.
The value of one future contract of Coffee is 375 x the value of 100 pounds of coffee.
The contract is traded on the IntercontinentalExchange (ICE)
Contract specifications
- Underlying value : coffee
- Contract size : 37,500 pounds
- value of the contract : coffee price / 100 pound x 375
- Minimum fluctuation : 0,05 (= $ 18,75 per contract)
- Settlement type : physical
- Periodicity : March, May, July, September and December
- Delivery Period : seven business days prior to the last business day of the delivery month
Trading example
- Coffee at 132,15 $ / 100 pounds
- The underlying value of one future contract for 'coffee' is 132,15 x 375 = $ 49.556
- Buy at 132,15 and sell at 137,15.
- 5 x 375 = $ 1.875
