ICE-Coffee

Exchange Symbol KC
Chart (10 min.delay)  VIEW CHART
Exchange ICE/US  
Trading Months H,K,N,U,Z (January, March, May, July, September, December)
Contract Size 37,500 pounds (approximately 250 bags)
Tick Size 0.05 cents per pound ($18.75 per contract)
Daily Limits None
Trading Hours 3:15a.m. - 12:30p.m. CST
Last Trading Day Eight business days prior to last business day of the delivery month
Value of One Futures Unit $375.00
Value of One Options Unit $375.00
Margin Initial/Maintenance $2,870 / $2,700 VIEW ICE MARGINS
Coffee Futures Calendar VIEW CALENDAR

+Info   Coffee is one of the world's most important cash commodities. Coffee is the common name for any type of tree in the genus madder family. It is actually a tropical evergreen shrub that has the potential to grow 100 feet tall. The coffee tree grows in tropical regions between the Tropics of Cancer and Capricorn in areas with abundant rainfall, year-round warm temperatures averaging about 70 degrees Fahrenheit, and no frost. In the U.S., the only areas that produce any significant amount of coffee are Puerto Rico and Hawaii. The coffee plant will produce its first full crop of beans at about 5 years old and then be productive for about 15 years. The average coffee tree produces enough beans to make about 1 to 1 ½ pounds of roasted coffee per year. It takes approximately 4,000 handpicked green coffee beans to make a pound of coffee. Wine was the first drink made from the coffee tree using the coffee cherries, honey, and water. In the 17th century, the first coffee house, also known as a "penny university" because of the price per cup, opened in London. The London Stock Exchange grew from one of these first coffee houses.

Coffee is generally classified into two types of beans: arabica and robusta. The most widely produced coffee is arabica, which makes up about 70 percent of total production. It grows mostly at high altitudes of 600 to 2,000 meters, with Brazil and Colombia being the largest producers. Arabic coffee is traded at the Intercontinental Exchange (ICE). The stronger of the two types is robusta. It is grown at lower altitudes with the largest producers being Indonesia, West Africa, Brazil, and Vietnam. Robusta coffee is traded on the LIFFE exchange.

Ninety percent of the world coffee trade is in green (unroasted) coffee beans. Seasonal factors have a significant influence on the price of coffee. There is no extreme peak in world production at any one time of the year, although coffee consumption declines by 12 percent or more below the year's average in the warm summer months. Therefore, coffee imports and roasts both tend to decline in spring and summer and pick up again in fall and winter.

Very low prices for coffee can create serious long-term problems for coffee producers. When prices fall below the costs of production, there is little or no economic incentive to produce coffee and coffee trees may be neglected or completely abandoned. When prices are low, producers cannot afford to hire the labor needed to maintain the trees and pick the crop at harvest. The result is that trees yield less due to reduced use of fertilizer and fewer employed coffee workers. One effect is a decline in the quality of the coffee that is produced. Higher quality Arabica coffee is often produced at higher altitudes, which entails higher costs. It is this coffee that is often abandoned. Although the pressure on producers can be severe, the market eventually comes back into balance as supply declines in response to low prices.

Coffee prices are subject to upward spikes in June, July and August due to possible freeze scares in Brazil during the winter months in the Southern Hemisphere. The Brazilian coffee crop is harvested starting in May and extending for several weeks into what are the winter months in Brazil. A major freeze in Brazil occurs roughly every five years on average.

Coffee futures are traded at the Intercontinental Exchange (ICE), the Bolsa de Mercadorias & Futuros (BM&F), the Tokyo Grain Exchange (TGE), and the London International Financial Futures and Options Exchange (LIFFE).

Prices - ICE Arabica coffee futures prices (Barchart.com symbol KC) posted the high for 2017 in January at 156.95 cents per pound on concerns about future supplies. Specifically, Conab said that Brazil's 2017/18 coffee output would fall 15% to 43.7 million bags from 51.4 million bags in 2016/17 since crops were in the lower-yielding half of their 2-year cycle. Coffee prices then trended lower the first half of 2017 and dropped to a 2-year low in June at 113.00 cents per pound as abundant supplies pushed prices lower. Data from the Green Coffee Association showed that U.S. June coffee inventories surged +17.5 yr/yr to a 23-1/2 year high of 7.295 million bags, while ICE-monitored coffee inventories climbed to a 1-1/2 year high. Also, ICE data showed October-June global coffee exports were up +5.6% yr/yr to 92.29 million bags. In addition, the Brazilian real tumbled to a 1-year low against the dollar in May, which incentivized for Brazil's coffee producers to boost more-profitable exports. Coffee prices recovered slightly in Q3 2017 as weather concerns in Brazil fueled fund short-covering due to limited precipitation in Minas Gerais, Brazil's biggest arabica bean growing region. The rally soon faded and coffee prices drifted lower into year-end. ICE-monitored coffee inventories rose to a 2-year high in December and heavy rains in Brazil in Q4 alleviated coffee crop concerns. Coffee finished 2017 down -7.9% for the year at 126.20 cents per pound.

Supply - World coffee production of green coffee in the 2017/18 marketing year (July-June) is forecasted to rise +0.1% yr/yr to 159.312 million bags (1 bag equals 60 kilograms or 132.3 pounds), slightly below the 2013/14 record high of 160.059 million bags. Coffee ending stocks in the 2017/18 marketing year are forecasted to fall -3.2% to 34.001 million bags. Brazil is forecasted to be the world's largest coffee producer by far with 52.100 million bags of production in 2017/18, which is 32.7% of total world production. Other key producers include Vietnam with 18.0% of the world's production Columbia with 9.2%, and Indonesia with 6.8%. Brazil's coffee production in 2017/18 is forecasted to fall -7.1% yr/yr to 52.100 million bags. Vietnam has become a major coffee producer in recent years, boosting its production to a record 29.833 million bags in 2013/14, up from less than a million bags in 1990.

Demand - U.S. coffee consumption in 2017 rose +1.5% to 27.921 million bags, a new record high.

Trade - World coffee exports in 2017/18 are forecasted to rise +0.2% to 130.326 million bags, down from the 2015/16 record high of 133.382. The world's largest exporters of coffee in 2017/18 are forecasted to be Brazil with 25.3% of world exports, Vietnam with 20.4%, and Columbia with 10.1%. U.S. coffee imports in 2017 rose +1.5% yr/yr to 27.92 million bags, a new record high. The key countries from which the U.S. imported coffee in 2017 were Brazil with 22.3% of U.S. imports, Columbia with 20.8%, Mexico with 4.7%, and Guatemala with 4.6%.

Information on commodities is courtesy of the CRB Yearbook, the single most comprehensive source of commodity and futures market information available. Its sources - reports from governments, private industries, and trade and industrial associations - are authoritative, and its historical scope for commodities information is second to none. The CRB Yearbook is part of the cmdty product line. Please visit cmdty for all of your commodity data needs.

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Free Softs Brochures and Reports from ICE US

ICE offers a broad range of soft commodities futures and options for the coffee, cocoa, sugar, cotton and frozen concentrated orange juice markets providing commercial market participants with effective hedging tools to manage their price exposure and provide investors the ability to take a position on the future price movement of these often volatile commodities.

ICE is home to the global benchmarks for raw and refined sugar, Arabica and Robusta coffee, as well as US and European Cocoa prices. ICE is also the exclusive global market for the benchmark Cotton No. 2 and FCOJ futures and options.

DISCLAIMER: The above information was drawn from sources believed to be reliable. Although it is believed that the information provided is accurate, no guarantee is made. ITG Futures assumes no responsibility for any errors or omissions.

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