Liffe to list revised coffee contract on 2008, Jan 14

Liffe said on Wednesday it plans to list a revised robusta coffee futures contract on January 14 with a larger 10-tonne lot size and a wider range of deliverable qualities.

The first futures delivery month will be November 2008.

The exchange, a unit of NYSE Euronext NYX.NENXT.PA, announced on Oct 4 plans to revise its coffee contract on the eve of the launch of a rival contract on the Intercontinental Exchange ICE.N. No date was then given for the changes.

Liffe said it has doubled the contract size from 5 tonnes to better reflect transactions in the underlying physical market and allow for improved economies of scale in trading and delivery. ICE has a much larger contract size of 17 tonnes.

Other changes include new sampling procedures, allowing the delivery of coffee which has been re-bagged from bulk and a revised age discount structure.

“These changes will help to ensure that the contract maintains its key position as a hedging vehicle for commercial users, and will also underline the appeal of the contract to the…managed fund communities,” Ian Dudden, Director of Commodity Derivatives at Liffe said in a statement.

The November 2008 and January 2009 futures delivery months of the revised contract will be listed in parallel with the same months on the existing contract, the exchange said.

European physical coffee traders have been asking Liffe for some years to increase the contract size and make a number of other revisions. Some argue making a wider range of coffee deliverable will making it harder to manipulate the market.

Source: Reuters

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