SICOM Robusta Coffee Contract to Start Trading April 22
Singapore Commodity Exchange (SICOM), a subsidiary of Singapore Exchange (SGX), is pleased to announce the launch of its Robusta Coffee Futures Contract (SICOM Coffee) on Thursday, 22 April 2010 at 10.00am.
“The launch of SICOM Coffee is timely, as South East Asia has grown to become the largest producer and exporter of Robusta coffee. SICOM Coffee is set to play a key role in establishing an Asian benchmark price for Robusta coffee,” said Mr Jeremy Ang, Chief Executive Officer of SICOM.
Ms Angeline Koh, Deputy Director, Sector Division, Financial Markets Strategy Department of the Monetary Authority of Singapore said, “With Vietnam and Indonesia being the world’s two largest Robusta coffee producers, there are many coffee exporters and traders based in Asia. A well-designed coffee futures contract will serve as an effective risk management instrument for the coffee industry based in Asia. As part of the development of Singapore’s commodity derivatives market, we welcome the launch of unique Asian-centric contracts that will strengthen Singapore’s lead as the regional commodity derivatives trading and risk management hub.”
Mr Luong Van Tu, Chairman of Vietnam Coffee and Cocoa Association said, “The launch of SICOM Robusta Coffee deliverable into bonded warehouses in Vietnam is representative of Asian trade which will benefit Vietnamese coffee growers and exporters.”
Mr Victor Mah, President of Singapore Coffee Association said, “Asia and in particular South-east Asia is a key player in the global Robusta coffee market but lacks an Asian price discovery platform. SICOM’s Coffee will offer international market participants an effective hedging tool to manage their price risk.”
SICOM Coffee is a physical delivery futures contract, traded in 5 metric tons per lot of Robusta Coffee. Trading hours are from 10.00am to 12noon and from 4.00pm to 11.00pm, covering both Asian and European hours. Delivery will be made via warehouse receipts representing coffee stored in bonded warehouses in Ho Chi Minh City, Vietnam or Singapore. This simple and efficient delivery mechanism provides for a short delivery period and simplified logistics.
To support the delivery mechanism for SICOM Coffee and new physically deliverable contracts, SICOM has also put forth a framework of Warehousekeeping Procedures that contain requirements for admission, duties and responsibilities of warehouse keepers.