Coffee futures sale and delivery

Corelio · Sep 25, 2009

Quote from coffee:

Hi,

I'm not shure this is the right place to ask.

I have read other threads in the forum but did not find an answer to my question.

Well my question is this...

My family for many generations has earned a living by cultivating coffee. It's a bit hard but a honest and nice way of living. In my village most families make a living by producing coffee. Every season we strive to produce the best coffee, and even participate in coffee contests so we get prizes and try to sell it for a better price.

We usually sell the coffee bean by the kilogram in the local market where every other family that produces coffee brings the product and is weighed and quality assesed by the companies that purchase (they are called intermediaries) and paid accoordingly. It has been like this for many years.

The problem is... the intermediaries every season are more abusive. They fix the prices between them so when they come they purchase the beans at very very low prices and none of them will pay more than a given price. Every year the price is lower and lower. To cope with the decrease in price every season we try to produce a bigger quantity, but it's very unpredictable. Some seasons we even loose money, producing coffee is very expensive. The intermediaries sell the coffee at least 10 times more expensive than they purchase it.

So now I'm in the university studying, and one of my classes is economy, and I learned that at large scale coffee is traded in futures. So I searched the internet to find the price of coffee futures and...

COFFEE 'C' FUTURE (USd/lb.) 129.300

I was shocked!!!

I have not been in my town for years since I went to the city to study but am almost sure that the coffe price at which we sell is extremely, and I mean extremely low in comparison with that.

In fact that price is so high that I'm sure that its not dollars per pound (it must be some different pound or more pounds). Yet, I'm sure it's tens of times higher than what we are paid.

Â¿How can I sell coffee futures of the coffee we produce? I asked my professor and he doesn't know.

My family produces only some tonnes of coffee, but if you add up the whole town I'm sure it would be a HUGE quantity, if you add up the neighboring towns then we are speaking thousands of tonnes.

So... I write a Coffee future contract (the obligation to deliver the coffee at a given price at a given time) and then what?

I know that they are traded on NYMEX stock exchange in New York City, USA. Â¿Should I give the contracts to them? Â¿And then they will call me to deliver the coffee somewhere and pay me?

I would really appreciate if someone could help me. Or maybe point me to the right place to ask. I called my country's stock exchange but they told me that they don't know anything about what I am asking. I also called banks and brokerage houses and even the ministry of agriculture but no one seems to know what I am talking about. Â¿Should I call NYMEX in New York City?

I made my best effort to write this in correct English but if I made a mistake or something is not clear please tell me and I will rephrase or correct the information.

Thank you very much.
More...

Have you tried to apply the price fixing in reverse? Or at least bypass the intermediaries by offering an attractive price to the ultimate buyer?

nazzdack · Sep 25, 2009

Quote from Corelio:
....bypass the intermediaries.....
More...

The intermediaries will murder the growers if they try "that". :eek:

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Coffee futures sale and delivery

Corelio

nazzdack