Brazilian exporters plan to petition the world’s largest commodities exchange group for arabica coffee, the IntercontinentalExchange (ICE), to get a better deal for their beans.
According to sources in a Wall Street Journal report, the Council of Brazilian Coffee Exporters (CeCafe) plans to ask the ICE to reduce a 9-cents-per-pound discount that has been applied to Brazilian arabica futures since the country’s beans were given right to trade on the exchange in 2010. Here’s more from that report:
That means that the owner of that physical coffee would receive 9 cents less per pound than the contracted price reflected on the exchange. With one contract representing 37,500 pounds of coffee beans, that difference adds up to $3,375.
Brazilian growers’ battle for inclusion pitted them against critics, including growers groups from other Latin American nations, which argued that coffee from Brazil was of lower quality than the hand-picked, highland-grown beans from other parts of the region. Industry officials say the exchange set the 9-cent discount, the largest discount in the ICE system, in response to the concerns over quality.
The petition threat comes as arabica futures on the exchange are hitting a two-month low, in part because of an over-supply of Brazilian beans. Brazil remains the largest coffee exporter in the world. Here’s the latest on ICE coffee futures from Bloomberg:
July Arabica coffee dropped 1.7% to $1.3285 a pound at 11:04 a.m. on ICE Futures U.S. in New York. The price saw its sixth straight decline, the longest slide since March 19. Earlier, the commodity touched $1.3275, the lowest for a most-active contract since April 29. A bag weighs 60 kilograms, or 132 pounds.
For the year beginning July 1, Brazil’s exports are expected to be up nearly six percent over last year, but a leftover supplies from last year are affecting futures.
Nick Brown is the editor of Daily Coffee News by Roast Magazine. Feedback and story ideas are welcome at publisher (at) dailycoffeenews.com, or see the "About Us" page located at the bottom of this site for contact information.