Today The Dow Jones Newswire carried a story which is the most significant development in Specialty Coffee in a decade. The article indicated that a new Futures Contract specifically for Specialty Grade Coffee will begin trading next year. As I have suggested in several previous posts including one 2 years ago (Delinking from the C Part I and Part II) and 1 year ago (The Shared Hedge), Specialty Coffee deserves and needs a special contract to more accurately set pricing and to insulate from the vagaries of the C which is fed and starved by speculation.
The establishment of the Specialty Coffee Futures Contract will necessarily (due to low liquidity/volume) trade with a much higher risk (Delta) premium than the C, as I suggested in the exchanged counterparty option contract of The Shared Hedge. This new Specialty contract should act as a true hedge rather than a speculative vehicle and therefore appeal mostly to coffee growers, green merchants, importers and roasters leaving speculators huddled around the C where volume and liquidity provides safety should they need to wind up a contract to free up cash. Mark my words...THIS IS HUGE!
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About Me
- coffeeco
- Richard Ottenhof Kingston, Ontario, Canada I established Multatuli Coffee Merchants in 1997, specializing in the roasting and wholesale distribution of Organic Coffee. Most recently, I founded coffeeco, three retail espresso bars in Kingston Ontario. I have roasted over a million pounds of coffee (old school...no computer roasting) and am certified by the Barista Guild of America and the Specialty Coffee Association of America as a Lead Instructor. I have served as a member of the SCAA Skill Building Courses Subcommittee and am a certified Barista Competition Technical Judge. In my spare time I am a Certified Stone Mason, an avid canoe tripper, an aspiring cyclist and a serial renovator.
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