New York, April 21: The Coffee, Sugar & Cocoa Exchange (CSCE) will continue to study the possibility of allowing Brazilian arabica coffee to be delivered against its coffee `C' futures contract despite some industry criticism, the exchange said on Monday.The exchange is considering making washed Brazilian coffee (wet-milled) deliverable against the futures contract at a 4 cent per pound discount to cash. The current contract allows coffee from Mexico, Salvador, Guatemala, Costa Rica, Nicaragua, Kenya, New Guinea, Tanzania and Uganda to be delivered on the exchange.
Coffee from Columbia is deliverable at a 2-cent-per-pound premium. Coffee from Honduras and Venezuela is deliverable at a one-cent discount.
An April 20 letter from CSCE President James Bowe to critics of the proposal said, "All comments from every market source will be given full consideration at the Committee and Board level."
Terry Gordon, director, corporate communications with the CSCE, said Bowe's letter responded to William Stixrud,president of the Guatemala National Coffee Association, Miami, Florida, and to Ricardo Seevers, president with the Costa Rican Coffee, Institute, San Jose, Costa Rica.
Both had expressed misgivings about the proposed change in interviews last week, he said."We put this letter out addressing those concerns," he added.
Gordon said Stixrud and Seevers "voiced concern about the Brazilian coffee coming onto the exchange" and they "indicated that if that were the case they would consider leaving the exchange."
That possibility prompted Bowe's letter, he said. Stixrud and Seevers could not be reached for comment late Monday. As already reported, Central American leaders will meet May 11 in Guatemala to discuss the proposal. A source said the countries are opposed to the inclusion of the Brazilian coffee on the exchange because it is of lower quality, which would depress the premium of the paid for Central American coffees.
The letter said that the CSCE coffee committee recommended studying the addition ofBrazilian coffee to the list of deliverables. The committee noted that the CFTC (Commodity Futures Trading Commission) approval process likely would take several months for such a contract change. Gordon said that the CSCE intends to pursue its study of the the contract change. "It's our intent to always be sure that the contract reflects market reality," Gordon said.
He said the exchange will do everything in our power to make sure that this is handled well.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
