Course 10 of 20 · Coffee Desk Academy

Differential Trading & Basis

Stage C, Basis, futures and currency. Level 6 of 10.

Trading the differential itself: how physical basis is quoted, how it moves, and how it is risk managed separately from the exchange price.

118 chapters · 11 modules · every chapter one 8 to 10 minute explainer · builds on: Course 03, Course 04, Course 05

Enrol or enquire See the 118 chapters
How a chapter is delivered

One chapter is one idea taken to the point of use

Each chapter covers one idea to the point where you can use it, and comes two ways: a narrated explainer, and a deep dive audio discussion of around thirty minutes that works the same material at depth.

Self-paced throughout, and the same chapters can be taught as a cohort. Chapters run in order: each one assumes only what the chapters before it taught, and capability belonging to a later course is named and deferred rather than half-covered.

Curriculum

11 modules · 118 chapters

Open any module for its full chapter list, in teaching order.

M0 Two Prices in One Coffee Contract Ch 1-11
  1. Why One Bag of Coffee Carries Two Prices at Once
  2. The Exchange Component and the Differential Component Defined Apart
  3. Splitting a Guatemalan Invoice Into Its Two Parts
  4. Covering the Benchmark Price Leaves the Differential Standing
  5. What a Coffee Differential Is Actually the Price Of
  6. The Two Components Run on Different Clocks
  7. Who on a Coffee Desk Owns Which Half
  8. Treating the Two Components as Independent, and Where That Breaks
  9. A Colombian Lot and a Brazilian Lot Against One Benchmark
  10. Agreeing the Gap Before Anybody Agrees the Price
  11. The Line Between a Differential and a Futures Position
M1 How an Origin Differential Is Formed Ch 12-22
  1. The Exporter's Build From Farmgate to a Free on Board Quote
  2. From a Free on Board Gap to a Delivered Gap at the Roaster's Door
  3. Why One Parcel Shows Two Different Gaps in Two Places
  4. Who Puts a Differential on the Table and Who Takes It
  5. The Marginal Exporter and the Marginal Roaster Set the Number
  6. A Quality Description Is the Address of a Differential
  7. Shipment Period as Part of the Quote, Not a Detail Beside It
  8. Lot Size, Container Loads and the Gap a Small Parcel Pays
  9. Country Risk Priced Inside an Origin Differential
  10. Preparation, Screen Size and the Gap Between Two Sortings
  11. The Premium That Is Not a Differential
M2 The Reference a Differential Hangs From Ch 23-33
  1. Quoting Against the ICE Futures US Arabica Contract
  2. Quoting Against the ICE Futures Europe Robusta Contract
  3. Who Chooses the Benchmark Month in an Offer
  4. Comparing Two Quotes Written Against Different Months
  5. The International Coffee Organization Group Indicators as a Cross-Check
  6. Brazilian Indicator Prices and What They Measure
  7. The Colombian Internal Purchase Price as a Floor Under a Gap
  8. Reading a Vietnamese Internal Quotation Into a Robusta Gap
  9. Why the Exchange Adjustment Table Does Not Forecast Your Gap
  10. Choosing the Reference a Lot Should Be Quoted Against
  11. When the Chosen Reference Stops Describing the Coffee
M3 Direction, Sign and the Reversed Quote Ch 34-43
  1. Premium and Discount Are Positions, Not Adjectives
  2. Widening a Premium Against Widening a Discount
  3. Strengthening and Weakening Read From Each Seat
  4. Who Gains When an Origin Gap Moves Out
  5. One Quote Read From the Buyer's Seat and the Seller's Seat
  6. Writing a Gap So It Cannot Be Read Backwards
  7. The Reversed-Quote Audit as a Daily Routine
  8. An Inverted Confirmation and What It Cost
  9. When a Gap Crosses Zero and a Premium Becomes a Discount
  10. Reading a Differential Move Against Your Own Book
M4 What Moves a Coffee Differential Ch 44-55
  1. A Short Crop at One Origin and Its Own Gap
  2. Harvest Timing and the Early-Season Quotation
  3. Carryover at Origin as a Differential Driver
  4. Exporter Competition and the Exportable Surplus
  5. Internal Price Support and Producer Withholding
  6. Ocean Freight and Container Availability in the Gap
  7. Roaster Substitution Between Origins
  8. Washed Against Natural and the Preparation Gap
  9. Arabica and Robusta Substitution Seen in the Gaps
  10. Destination Demand Shifts and the Gap at the Port
  11. Exchange Certified Stocks and the Physical Gap
  12. Which Drivers Turn in a Week and Which Hold for Seasons
M5 Measuring and Marking the Gap Ch 56-66
  1. Assembling a Quotation History for One Origin and Grade
  2. What a Quotation Record Leaves Out
  3. Restating Quotations Across Shipment Windows
  4. Restating Quotations Across Delivery Terms
  5. The Seasonal Shape of One Origin's Quotation
  6. Reading the Spread of Outcomes Rather Than the Average
  7. A Defensible Fair Value Range for One Quotation
  8. Marking an Unsold Lot at Month End
  9. The Forward Shape of an Origin Quotation
  10. The Daily Page a Coffee Differential Desk Watches
  11. The Corrections a Quotation Series Needs Before You Trust It
M6 The Differential as a Position Ch 67-77
  1. Long and Short the Gap on a Coffee Book
  2. Buying at Origin and Selling at Destination as One Trade
  3. The Gap Between Two Origins as a Spread
  4. The Gap Between Two Grades of One Origin
  5. The Shipment Window Spread
  6. Sizing a Differential Exposure in Bags and Cents
  7. What It Costs to Carry an Open Gap
  8. A Differential Limit Written Apart From a Price Limit
  9. Writing Down the View Behind a Gap Trade
  10. A Worked Position, Part One: the Thesis and the Entry
  11. A Worked Position, Part Two: the Move, the Exit and the Attribution
M7 Managing the Gap Apart From the Benchmark Ch 78-88
  1. What a Futures Position Does Not Touch
  2. The Exposure Left After the Benchmark Is Covered
  3. Measuring the Residual in Cents a Pound
  4. A Robusta Position Referenced to an Arabica Benchmark
  5. A Month Mismatch Between the Physical and the Cover
  6. Back-to-Back Matching as the First Control
  7. The Unmatched Balance After a Partial Sale
  8. Passing a Differential to the Counterparty
  9. Over-the-Counter Structures Offered Against a Differential
  10. Pricing an Unmanageable Gap Into the Offer
  11. Which Gap Exposure to Keep and Which to Pass On
M8 Arguments the Market Has Not Settled Ch 89-97
  1. The Mean Reversion Argument for Origin Gaps
  2. The Crop Balance Forecasting Argument
  3. The Argument That Basis Risk Cannot Be Hedged
  4. The Argument That a Differential Measures Quality
  5. The Argument That the Two Components Are Independent
  6. The Withholding Argument at Low Benchmark Prices
  7. The Argument for Fixing Differentials Far Forward
  8. The Argument That Origin Gaps Converge
  9. Testing a Differential Belief Against Your Own Trade Record
M9 The Gap Under Stress Ch 98-107
  1. A Frost or Drought at One Origin and the Path of Its Gap
  2. An Export Restriction and the Gap It Creates
  3. A Port or Inland Logistics Breakdown at Origin
  4. A Vessel Shortage Hitting Every Origin at Once
  5. A Roaster Stepping Back and the Discount That Forms
  6. A Squeeze Against a Short Physical Seller
  7. The Differential Half of a Washout Settlement
  8. The Gap on a Rejected Lot
  9. Reading the Recovery of a Disrupted Quotation
  10. A Temporary Spike Against a Lasting Step Change
M10 A Worked Desk and the Honest Limits Ch 108-118
  1. A Position Sheet With Two Columns, Part One: Origin Purchases
  2. A Position Sheet With Two Columns, Part Two: Customer Sales
  3. A Position Sheet With Two Columns, Part Three: the Reconciliation
  4. Attributing Profit Between the Gap and the Benchmark
  5. A Worked Case, Part One: the Book at the Start of a Season
  6. A Worked Case, Part Two: Three Events Across the Shipment Window
  7. A Worked Case, Part Three: the Result and the Review
  8. Explaining a Differential Loss to a Trading Committee
  9. The Direction Audit Run Across a Whole Book
  10. The Gap a Fixation Leaves Standing
  11. What an Origin Quotation Cannot Tell You

The brochure gives each of these 118 chapters a paragraph on what it covers and what you can do once you have worked through it.

This is course 10 of twenty

It stands alone, and it is also the entry point to the Coffee Desk Academy pathway.

Enrol or enquire See the whole pathway