How coffee prices work: ICE "C", London robusta, differentials and units

The two futures benchmarks

On price screens the delivery months appear as letter codes: H (March), K (May), N (July), U (September) and Z (December) for arabica, plus F (January) and X (November) for robusta. "KCZ" or "Coffee C December" therefore means the arabica contract for December delivery.

Futures are standardised contracts for coffee delivered in a future month. The FNC describes the "C" contract as the reference for the international price of Colombian and other mild arabicas. One "C" contract of 37,500 lb is about 17,010 kg, or about 283 bags of 60 kg; one robusta contract of 10 tonnes is about 167 bags. Colombia's coffee federation (FNC), for example, calculates its daily price for farmers from the closing "C" price, the peso exchange rate and the reference differential for Colombian coffee.

Differentials: the price of quality and origin

The FNC defines the differential as an additional amount that can change with quality, availability, supply and demand and the reputation of an origin or country. A physical contract can be:

• Fixed price: one number per pound, kilogram or bag, agreed at signing.
• Price to be fixed: "futures month plus (or minus) X cents". The ITC Coffee Guide says the contract must state the futures market and month, who has the right to fix the price (buyer's or seller's call) and the earliest and latest dates for fixing.

ICO indicator prices

The International Coffee Organization publishes daily indicator prices for four groups of coffee (Colombian Milds, Other Milds, Brazilian Naturals and Robustas) and a composite indicator that is a weighted average of the four, all in US cents per pound. They are useful for following the market over time, not for pricing a single lot.

Per pound, per kilogram, per bag

One pound is exactly 0.45359237 kg (NIST), so one kilogram is about 2.2046 lb and a 60 kg bag is about 132.28 lb. Brazil's Conab reports production in 60 kg bags of processed coffee, the FNC quotes parchment per carga of 125 kg, and the Nairobi Coffee Exchange auctions in US dollars. Worked examples with round numbers (not current prices):

To convert: price per kg = price per lb ÷ 0.45359237; price per lb = price per kg × 0.45359237; price per 60 kg bag = price per kg × 60. Coffee Parchment shows lot prices per pound or per kilogram, in your choice of currency.

Parchment and cherry prices

Parchment is worth less per kilogram than green coffee, because part of its weight is lost in milling. In Colombia the FNC prices dry parchment with a yield factor: 94 kg of parchment for a 70 kg bag of Excelso at the reference factor. A lot with a better (lower) factor earns more. See what parchment coffee is.

What else moves the price you get

• Quality: grade, defects and cup score. See the grading guide.
• Delivery term: an FOB price includes inland transport and export clearance; an EXW price does not; a CIF price adds sea freight and insurance.
• Payment terms and who carries the credit risk.
• Exchange rates. The FNC names the New York price and the exchange rate as the two main variables behind the Colombian farm price.
• Taxes and levies at origin, such as Colombia's coffee contribution of 6 US cents per pound of green coffee, paid to the National Coffee Fund.

Compare prices across origins

Browse lots from Colombia, Brazil, Vietnam or Kenya and switch between price per pound and per kilogram in the settings.