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Exporter's Guide to Coffee Trade
Transcript of Exporter's Guide to Coffee Trade
What do I
of Coffee Products
Forms of Contract
Subject to Approval of Sample:
Description: Country code, green appearance, and liquor quality
Fair Average Quality
Coffee will represent
the average quality of the crop
will not contain
too many pales
Liquor should not
eliminate the risk in buying unseen coffee...
SAS, no approval of sale.
canceled with unapproved
exporter supplies a sample
to the buyer
SAS, repeat basis.
If the first sample is rejected, a second or third may be sent.
SAS, samples for
buyer's choice. Multiple samples are sent
at the same time.
Certificate of Origin:
issued for every
producer to consumer
some countries levy
duties for certain
contract seller must
provide an insurance certificate by a
'clean on board'
bills of lading
Two Major Online Resources
WebICE view only is an Internet-based subscription service that provides real-time access to trading activity on the ICE platform. WebICE is only available to corporates active in the ICE energy and commodities markets.
With more than 8,000 listed issues of all sizes, industries and geographies, the cash markets of NYSE Euronext – NYSE, NYSE MKT, NYSE Euronext®, Free Markets and NYSE Alternext® – represent nearly 40 percent of the world's equities trading, and the most liquidity of any global exchange group.
General Export Regulations
- Quality Control
Country Specific Export Regulations
Pricing Indicators and Tools
Supply and Demand Information
price risk transfer
Differentials vs. Futures
more risk averse;
they better avoid
potential price swings
Efforts to promote quality are prejudiced by world market prices and the degree to which buyers are willing to reward attention to the safeguarding and improvement of quality with adequate premiums for better than average quality.
- coffees have a high intrinsic value
- a fine or unique cup, and are
- usually of quite limited availability
- often retailed under straight estate or origin names.
- usually well presented washed coffees
- includes superior washed robustas some naturals, and top organic
- niche coffees
- good cupping coffees
- well presented, not visually perfect
- retailed as straight origins and as blends
- includes good quality, well-prepared organics
- broader market for this quality
- includes a good percentage of specialty coffee
- Fair average quality
- Reasonably presented, not visually perfect
- Offers a decent clean cup; not impressive
- Most Robustas included in this category
- Accounts for 85-90% of world coffee consumption
(exemplary and high quality coffee < 15%
of world coffee consumption)
- able to be exported
- attractive to exporters because of
the minimal cost; attractive to consumers
But there is no inherently bad coffee, at least not when it is still on the tree. What happens to degrade the quality from then onwards is nearly always caused by human intervention.
-make a great first
impression and follow it
up with the cup they're
Selecting the Best:
Combat Human Error
Size & Density
Important to keep size
Different sizes do not
roast well together
Cause of Poor Color
Too rapid drying
Spread too thin or thick
Harvest of overripe
Coffee above 12.5%
Avoid obvious defects
(black beans) and
insect and pest damage
ISO Quality Certification
ISO 9001 - Certifies the quality
management system of the
coffee production.. NOT the product
The Q Coffee System, developed by the Coffee Quality
Institute, is an ongoing initiative to introduce internationally
accepted standards for quality, both cup and grade, for the
specialty coffee trade. The underlying assumption is that
while anyone can state they have quality, companies that
have their coffees graded through the Q Coffee System
will have the ability to provide their customers a guarantee
from a credible and independent third-party.
Q Coffee System
Export from Brazil
Export from Colombia
Export from Ethiopia
Export from Kenya
of coffee in the
2.7 Million Tons
in 2011 alone
as well as
no taxes on
coffee is taxed
are taxed 7.5% into
the EU and 10% into
in the world
** Discover the trade
relationship with China;
MFN, GEN, VAT and/or
Member of the WTO
tax rate (MFN)
Africa's top producer
of Coffee; 7th largest
in the world
Recent trouble with
banned 143 exporters
no futures trading
in Ethiopia; it has not
been established by their
ECX/Ministry of trade
70% of Kenyan coffee
is produced by small
Kenya AA is a
classification of coffee
graded after milled
Kenya Coffee is
traded once a
week at the
Kenya AA =
prices and volumes
Full liberalization of
the coffee market
through direct sales;
Europe is their largest
What are Futures?
The futures exchange is an organized marketplace that: Provides and operates the facilities for trading; Establishes, monitors and enforces the rules for trading; Keeps and disseminates trading data.
Cash price. The price now for coffee (by trading the physical product for immediate or prompt delivery).
Futures price. The expected price for coffee (by trading the different positions of the futures contract).
exposure to risk
The underlying price risk:
The prices for arabica or robusta futures as a whole rise or fall.
The differential risk or basis risk:
The difference between the price on the physical coffee market for a particular quality or origin, and the price on the future market (known as the basis or differential) increases or decreases.
By the Numbers
Total volume sales of coffee are expected to increase by a CAGR of 9% over the forecast period. The per capita coffee consumption is expected to continue increasing with growing urbanization as well as busier lifestyles, which will continue to promote the rise of the coffee culture in China. In addition, manufacturers are expected to introduce more new product to stimulate the market. The growing coffee culture in the country through the opening of cafés will continue to encourage sales of coffee in on-trade channels as well as off-trade channels
Coffee Demand: China
In 2012, the total volume growth of coffee was 10%, which was slightly slower than that in the previous year. Although China witnessed economic decline in the review period, the boom in the coffee culture in many cities helped to spur consumer interest in coffee and stimulated consumption growth.
China's coffee consumption was estimated to be approximately 45,000 tonnes in 2006, but some analysts predict this number could jump five-fold or even six-fold to reach 300,000 tonnes annually by 2020.