IntercontinentalExchange (NYSE: ICE), a leading operator of regulated global futures exchanges, clearing houses and over-the-counter (OTC) markets, announced that the Board of Directors of ICE Futures U.S. has approved the addition of Brazil as a deliverable origin for the Coffee "C" futures contract at a differential of 9 cents under par. The addition of Brazilian Arabica will become effective beginning with the March 2013 contract.
The ICE Futures U.S. Coffee "C" contract currently permits delivery of Arabica coffee beans from 19 countries. On May 3, 2010, ICE Futures U.S. published an exchange notice requesting the views of market participants on whether Brazil Arabica should be deliverable for the Coffee "C" contract. At a meeting on October 13, after full consideration of comments received, the exchange’s Coffee Committee agreed to recommend to the Board of Directors the adoption of the Rule amendments necessary to add Brazil as a deliverable origin. The Board of Directors of ICE Futures U.S. approved the Rule amendments today.
Like all exchange product committees, the Coffee Committee is comprised of representatives of the coffee industry and the financial trading community. The Committee’s role is to provide recommendations to the exchange regarding contract terms and conditions, market policy and operations, including deliverable coffee origins and differentials. Committee recommendations are not binding on the Board of Directors of ICE Futures U.S.
The Committee has considered the addition of Brazil Arabica to the Coffee "C" contract three times since 1999. The Committee’s previous consideration, in 2005, concluded that it was premature to add Brazil Arabica as a deliverable origin, but recommended reconsidering the issue as commercial experience with Brazil Arabica accumulated.
Following submission of the Rule amendments to the Commodity Futures Trading Commission, Brazil Arabica will be a deliverable growth for Coffee "C" with the March 2013 contract, consistent with exchange rules that permit contract specification changes to become effective on delivery dates with open interest more than 24 months forward from the amendment date.
