NEW YORK, U.S. – As a reminder, several amendments to the Coffee “C” futures contract rules, which were announced in March 2017 become effective starting with the May 2019 expiry. The relevant text from the earlier Exchange Notice announcing the changes is copied below.
Change to the Delivery Point Differentials For Miami, Houston and New Orleans
Effective starting with the May 2019 expiry, the Exchange is implementing amendments to Coffee “C” Rule Appendix IV, to provide that the differential for coffee delivered in each of the Miami, Houston and New Orleans delivery points shall be a discount of 50 points ($0.0050 per pound). Prior to this change the differential for each of these delivery points is a discount of 125 points.
The New York delivery point remains as the par delivery location for the contract; the Port of Virginia remains deliverable at no discount; and Bremen/Hamburg, Antwerp and Barcelona remain deliverable at a discount of 125 points.
New Rent Cost Adjustment
Also effective starting with the May 2019 expiry, the Exchange is implementing amendments to Coffee “C” Rule Appendix V (16) to create a new Rent Cost Adjustment (or “RCA”) for deliveries in all delivery points.
For each delivery period, the RCA for each delivery warehouse will be calculated and announced by the Exchange as of the close of business on the last business day of the month preceding the delivery month. For each delivery warehouse, the RCA will be calculated by: (1) deducting the posted monthly Storage rate for the licensed warehouse in which delivery is being made from the average of posted monthly Storage rates for all licensed warehouses in the Port of New York to determine the “monthly rent cost adjustment amount”; and (2) multiplying that “monthly rent cost adjustment amount” by 2 in the case of deliveries against the March, May and July delivery months and by 3 in the case of deliveries against the September and December delivery months.
A negative RCA results when the average monthly storage cost in a delivery point is higher than the average cost in New York, and results in a reduction to the invoice price to be paid by the Receiver to the Deliverer; a positive RCA results when the average monthly storage cost in a delivery point is lower than the average cost in New York, and results in an increase to the invoice price to be paid by the Receiver to the Deliverer.
The earlier Notice announcing these changes can be found here. The Exchange intends to begin calculating and publishing the Rent Cost Adjustment amount for each licensed warehouse in advance of the May 2019 expiry.
A copy of the amended Rules showing additions and deletions is below.
(In the text below, deletions are overstruck and additions are underscored.)
Appendix IV
Coffee “C” Differentials
The differentials for coffees delivered under the Coffee “C” Futures Contract are as follows:
Schedule C-3
Difference in Value Between Delivery Ports
New York Port District and the Port of Virginia Basis
New Orleans Port District Minus [125] 50 pts.
Miami Port District Minus [125] 50 pts.
Antwerp Port District Minus 125 pts.
Hamburg/Bremen Port District Minus 125 pts.
Houston Port District Minus [125] 50 pts.
Barcelona Port District Minus 125 pts.
Appendix V
Price Adjustments
Every Exchange Invoice shall include the following adjustments to the price stated on a Delivery Notice:
(16) In the case of coffee delivered in any delivery point, a Rent Cost Adjustment (“RCA”) which is calculated by the Exchange as of the last business day of the calendar month preceding the delivery month. The RCA shall be calculated by: (1) deducting the posted monthly Storage rate for the licensed warehouse in which delivery is being made from the average of posted monthly Storage rates for all licensed warehouses in the Port of New York to determine the “monthly rent cost adjustment amount”; and (2) multiplying that “monthly rent cost adjustment amount” by 2 in the case of deliveries against the March, May and July delivery months and by 3 in the case of deliveries against the September and December delivery months. A negative RCA shall be a reduction in the invoice price, and a positive RCA shall be an addition to the invoice price.
