B3 launches conilon/robusta coffee futures contract

B3, Brazil's stock exchange, began trading today the conilon/robusta coffee futures contract (coffea canephora). The new financial tool seeks to provide greater security for producers, cooperatives and industries in the sector, offering a form of protection against price volatility in the market. With the futures contract, it is possible to set the price for negotiations, mitigating risks associated with value fluctuations.

Brazil, one of the world's largest producers of conilon/robusta coffee, has Espírito Santo as its main production center. The state is responsible for around 70% of the national production of the variety. In addition to Espírito Santo, Rondônia and Bahia also have significant relevance in the production of conilon, contributing to Brazil's prominence on the world stage.

Marielle Brugnari (pictured), head of commodities products at B3, commented on the importance of the new tool for the agricultural market. “In the production and marketing of any agricultural product, it is very important to have a price lock tool for future sales. With this launch, we seek to meet a market demand for the creation of a derivative that increases the price protection of coffee against unexpected fluctuations,” she explained.

The conilon/robusta coffee futures contract allows for physical delivery of the product. The lots, consisting of raw coffee beans, will be deposited in warehouses accredited by B3. Each contract is equivalent to 100 bags of 60 kg, or 6 metric tons. The maturities are scheduled for the months of January, March, May, July, September and November.

An important feature of this contract is that it is quoted in reais (R$), unlike the Arabica coffee contract, which is quoted in dollars. “We understand that it makes more sense for a product like conilon to be traded in reais, since the largest volume of production is aimed at the domestic market, unlike Arabica coffee, which is a product aimed at export,” he said.

In addition to the new conilon/robusta coffee contract, B3 offers six other commodity contracts: arabica coffee, corn, CME soybeans, FOB Santos soybeans, beef cattle and hydrated ethanol. These contracts aim to serve different sectors of Brazilian agribusiness, offering solutions to mitigate financial risks associated with price volatility.

Technical specifications of the contract

• Object of negotiation: Raw coffee beans, produced in Brazil, coffea canephora, type 7/8 (7-35) or better, for delivery in Vitória (ES).

• Trading code: CNL.

• Price: Reais (R$), per 60kg bag.

• Contract size: 100 bags of 60 kg, or 6 metric tons.

• Expiration months: January, March, May, July, September and November.