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Below is a summary and basic information from the exchange for some of the popular commodities that fall under the softs sector.
Soft commodities markets are fairly predictable when it comes to their respective planting, growing and harvesting seasons. Most softs are international products. They are grown all over the world and their prices are affected by global supply and demand.
The Cocoa contract is the world benchmark for the global cocoa market. The contract prices the physical delivery of exchange-grade product from a variety of African, Asian and Central and South American origins to any of five US delivery ports. Cocoa futures are highly dependent on weather, requiring a hot and rainy climate to thrive. Production is generally confined to areas not more than 20 degrees north or south of the equator.
In 1925 the world's first cocoa bean future was started at the New York Cocoa Exchange. Cocoa futures prices have ranged between about 1000 and 2800 since the early 1980s. Cocoa hit a high near 5200 in 1977. Due to Cocoa's seasonal demand cycles and concentrated production sources, limited to just eight countries serving the global demand, the cocoa market is subject to a high degree of volatility. This issue presents attractive hedging and trading opportunities for cocoa traders around the world. Cocoa is a powder made from the fruit seeds of the cacao tree. About 3 million metric tons of cocoa are produced each year. Cocoa futures prices rarely follow reliable patterns due to political issues, mainly in Africa. These problems usually control short-term price movement.
Cacao trees are found only in hot, rainy, tropical climates, 20 degrees north and south of equator, just like vanilla. The first time cocoa, or chocolate was used as a romantic gesture was in the Mayan culture. Cocoa/chocolate is thought be an aphrodisiac. The Aztecs used cocoa to create a form of “hot chocolate” or as they called it “xocolatl” which means bitter water.
It takes a cocoa tree five years to produce its first cocoa beans (pods). Cocoa trees can live up to two hundred years, but will only produce cocoa beans for about twenty-five of those years. Cacao trees typically range from 13-26 feet tall. Cocoa trees need to be planted next to tall trees in order to protect them from direct sunlight. This is why you often see cocoa trees planted amongst mango and papaya trees. When the pods are ready to be picked, they are cut open so the beans inside can be taken out and roasted (baked). Before the cocoa bean is roasted, it has over three hundred different flavors. Roasting the beans dries them so they can be crushed into cocoa (chocolate powder). A tree produces about one thousand cocoa beans every year. That is enough to make about two pounds of chocolate. Plain cocoa is very bitter. It’s not really chocolate until you add sugar.
10 Metric Tons
$1.00/metric ton, equivalent to $10.00 per contract.
Dollar/Metric Ton
March, May, July, September, December
Deliverable
None
One business day prior to last notice day.
The Coffee C contract is the world benchmark for Arabica coffee. The contract prices physical delivery of exchange-grade green beans, from one of 20 countries of origin in a licensed warehouse to one of several ports in the U. S. and Europe, with stated premiums/discounts for ports and growths. Coffee was originally discovered in Ethiopia more than 2,000 years ago. Most production is dominated by countries such as Brazil, Vietnam, Indonesia and Colombia. India, Guatemala, Ethiopia and Mexico are also major producers.
Coffee is an ancient crop, with farming of coffee having begun around 3,000 years ago. Coffee trees, or bushes, grow primarily in subtropical climates. Coffee beans are the seeds of cherry-sized berries, the fruit of the coffee tree. Coffee is primarily classified in two types which are Arabica and Robusta. Robusta is cheaper and has more caffeine than Arabica and it is used in many commercial coffee products. But Robusta tastes bitter and acidic, so people only drink it with other things. Better quality Robustas are in some espresso blends. One coffee plant can produce up to 2000 beans a year, this translates to 1kg of raw coffee per year, per plant. Depending on the altitude and the weather conditions, the period between the coffee plant blossoming & the berries being ready to harvest is around eight to nine months. The plants often bloom for six to eight weeks, so it's quite common to find ripe & unripe berries on the same branch. The blossoms of the coffee plant are small, white, star shaped flowers that smell very much like jasmine.
The supply of coffee is affected by weather conditions, the health of the coffee trees, and harvesting practices. Historically, weather has played a major role in determining world supply. To make a drink from coffee beans, the beans must first be specially prepared by drying the beans and then roasting. The beans can be dried a short time after they are picked. This preserves them and makes them ready to be packed or roasted.
Coffee contains the drug caffeine. Caffeine is a mild stimulant which helps to keep people awake. Caffeine, like many drugs, can be addictive and can cause health problems. After as little as 10 minutes, the caffeine concentration in your blood reaches half the maximum concentration, which is enough to have an effect. The caffeine reaches maximum levels, making you most alert, after 45 minutes. Depending on how fast or slow your body's able to break down the drug, you could feel the effects of caffeine for 3 to 5 hours. Oil is the most widely used commodity in the world, coffee is next in line.
37,500 pounds
5/100 cent/lb., equivalent to $18.75 per contract.
Cents and hundredths of a cent up to two decimal places
March, May, July, September, December
Deliverable
None
One business day prior to last notice day.
Cotton has been one of the primary materials used in the production of textiles for well over 7000 years. Cotton may have existed in Egypt as early as 12,000 B.C. Cotton production in the United States dates back hundreds of years, prior to the US Civil War. Cotton was also once known as vegetable wool. Out of all of the types of cotton that are produced in the United States on a regular basis, the most popular type is called American Upland. China, the United States, India and Pakistan represent the four major cotton producing countries all over the world. Australia and Egypt produce the highest quality cottons in the world.
The cotton plant requires about 180 – 200 days from planting to full maturity ready for harvest. Once cotton is harvested, it is stored in modules for protection against the weather. Cotton is a unique crop in that it is both a food and a fiber. American ‘paper’ money is a blend of 75% cotton and 25% linen. The fiber from one 227kg cotton bale can produce 215 pairs of jeans, 250 single bed sheets, 1,200 t-shirts, 2,100 pairs of boxer shorts, 3,000 diapers, 4,300 pairs of socks or 680,000 cotton balls. There are 43 species of cotton in the world and some cotton grows on trees. In the U.S. cotton is regulated as a food crop. Cotton can be grown continuously without hurting the soil. The cotton industry accounts for more than $25 billion in products and services annually. Thomas Edison tried more than 1,000 different materials before deciding that charred cotton made the ideal filament for the very first light bulb. 150 yards of cotton are contained in every baseball. Cotton is also in hotdogs, ice cream, potato chips, and even bologna.
50,000 pounds net weight
1/100 of a cent (one "point") per pound equivalent to $5.00 per contract.
Cents and hundredths of a cent up to two decimal places
March, May, July, October, December
Deliverable
Futures contracts are subject to a daily price limit that can range from 3 to 7 cents per pound. Please consult ICE Exchange Rule 10.09 for details
Seventeen business days from end of spot month.
The Sugar No. 11 contract is the world benchmark contract for raw sugar trading. The contract prices the physical delivery of raw cane sugar, free-on-board the receiver's vessel to a port within the country of origin of the sugar. Sugar futures began trading in the United States in 1914 on the coffee, sugar and cocoa exchange in New York and the New York Board of Trade. The two sugar futures markets that are traded include world sugar No.11 and U.S. sugar No. 16. While Sugar No. 11 is the most commonly-traded international commodities futures product, Sugar No. 16 futures prices are often higher. The discrepancy in prices is due to subsidies and a tariff program that supports U.S. sugar farmers.
When sugar was first introduced to England in the twelfth century, it was grouped with other tropical spices like ginger, cinnamon, and saffron, and used by the very wealthy to season savory dishes. There are many reasons as to why sugar is included in food. The most obvious reason is tied to enjoyment. Sugar can add sweetness and improve the taste of many food stuffs. Sugar is a healthy part of a diet. Carbohydrates, including sugar, are the preferred sources of the body’s fuel for brain power, muscle energy and every natural process that goes on in every functioning cell. The average American consumes 76.6 pounds of sugar a year.
Sugar cane grows well in warm tropical climates, and any unforeseen event like severe frosts, can damage the sugar cane crop, thereby sending sugar prices spiraling. Political situations, weather patterns and changing trade relations can impact the prices of sugar directly. Investors often follow trends in Brazil and India. They are the world’s top two sugar producers. Brazil is the key player in the sugar market, and weather in the central and southern region of the country is crucial to global sugar trade. Given India’s vast sugar consumption, it switches between being a net importer and a net exporter. In many countries, including Brazil, large portions of the sugar produced is diverted to producing ethanol as a fuel. With increasing ethanol demand, sugar demand will also increase.
One sugar futures contract represents 112,000 pounds of raw cane sugar. Currently, 69 percent of the world's sugar is consumed in its country of origin, while the rest is traded on international markets. Plants with largest concentration of sugars are sugarcane and sugar beet. For the long period of time, sugar was very expensive and was often called “white gold”. It became stock good only in 18th century with development of thousands sugarcane plantations in South, Central and North America. 20th century brought the rise of artificial sweeteners and high-fructose corn syrup.
112,000 pounds
1/100 of a cent (one "point") per pound equivalent to $5.00 per contract.
1/100 cent/lb., equivalent to $11.20 per contract
March, May, July, October
Deliverable
None
Last business day of the month preceding the delivery month
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