Course 11 of 20 · Coffee Desk Academy

Arabica Futures & Physical Hedging

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

Hedging washed and natural arabica positions on the arabica contract, including contract specification, lot sizing, roll and hedge ratio.

126 chapters · 12 modules · every chapter one 8 to 10 minute explainer · builds on: Course 03, Course 08, Course 10

Enrol or enquire See the 126 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

12 modules · 126 chapters

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

M0 The Exchange Price Inside a Green Coffee Position Ch 1-11
  1. The Two Prices Inside One Coffee Quotation
  2. The Merchant Long Washed Colombians With No Sale Agreed
  3. The Merchant Short to a Roaster Before Buying the Coffee
  4. Counting the Pounds That Still Have No Price
  5. When Coffee Price Risk Attaches at Origin
  6. Why a Matched Purchase and Sale of Arabica Is Not Flat
  7. The Pound as the Unit Arabica Cover Is Counted In
  8. What an Uncovered Natural Brazil Holding Costs Over a Season
  9. Whose Seat the Order Is Placed From
  10. Threads Handed to the Differential and Fixation Desks
  11. The Order in Which Arabica Cover Gets Built
M1 The Arabica Contract Read Cold Ch 12-23
  1. Where the Arabica Contract Lives and Who Can Change It
  2. Finding the Contract Unit and Turning It Into Bags
  3. Cents per Pound, the Tick and What One Lot Is Worth
  4. The Deliverable Growths List and the Coffee Left Off It
  5. Exchange Grade Differentials Are Not Your Differential
  6. Licensed Warehouses and the Delivery Points Recognised
  7. The Delivery Months Arabica Trades and the Gaps Between Them
  8. First Notice Day, Last Trading Day and the Date You Work Back From
  9. Certification, Exchange Grading and the Coffee the Contract Accepts
  10. Why an Arabica Hedger Almost Never Tenders
  11. Position Limits, Accountability Levels and the Hedge Exemption
  12. Reading an Amendment Notice and Resizing Because of It
M2 Counting the Pounds the Cover Is Built Against Ch 24-34
  1. The Pound Figure Behind a Multi-Origin Green Book
  2. Two Bag Weights in the Same Book
  3. Lots, Rounding and the Pounds You Choose to Leave Open
  4. Netting Origin Purchases Against Roaster Sales First
  5. Shipment Tolerance and the Pounds That May Not Arrive
  6. Outturn Weight Loss and Whether Cover Should Follow It
  7. Coffee Bought in Parchment and Hedged in Green
  8. Soluble and Decaffeinated Volumes Reduced to Green Equivalent
  9. A Worked Pound Count, Part One: Reading the Purchase Contracts
  10. A Worked Pound Count, Part Two: Reaching the Lot Figure
  11. The Count Checked Before It Becomes an Order
M3 The Ratio and the Direction It Carries Ch 35-46
  1. The Hedge Ratio Posed as a Question About the Arabica Contract
  2. One Lot per Lot of Unpriced Coffee, and the Conditions
  3. A Long Green Position Is Covered by Selling Lots
  4. A Short Sale to a Roaster Is Covered by Buying Lots
  5. Reading Long and Short Out of a Coffee Position Report
  6. The Sign Error That Doubles a Coffee Desk's Exposure
  7. Reading the Ticket Back Against the Green Book
  8. When the Ratio Is Not One: A Thin Origin Against a Deep Contract
  9. Fitting a Ratio From a Price Record, and Why It Is Evidence Only
  10. A Ratio Above One and the Position It Quietly Creates
  11. A Ratio Below One Chosen on Purpose and Written Down
  12. A Worked Ratio on a Mixed Washed and Natural Book, Illustrative
M4 Washed and Natural Arabica Against One Contract Ch 47-56
  1. One Contract Standing Behind Two Very Different Coffees
  2. Washed Central Americans and the Cover That Fits Closely
  3. Brazilian Naturals and the Preparation the Contract Was Not Built Around
  4. The Differential Beside a Natural Lot and the Part Cover Touches
  5. Hedging East African Lots Where the Liquidity Sits Elsewhere
  6. Semi-Washed and Pulped Natural Lots Between the Two Cases
  7. When the Washed Hedge and the Natural Physical Part Company
  8. Splitting One Cover Across Washed and Natural Pound Counts
  9. A Natural Coffee Hedge Through a Brazilian Harvest, Illustrative
  10. What the Preparation Gap Leaves Standing
M5 Choosing the Delivery Month Ch 57-66
  1. Matching the Contract Month to the Shipment Period
  2. The Months Arabica Lists and the Shipments Between Them
  3. The Crop Year at Origin Against the Exchange Calendar
  4. New Crop and Old Crop Months in the Same Cover
  5. Hedging a Shipment That Prices Against an Average of Prints
  6. Spreading Cover Across the Pricing Days, Worked
  7. Exchange Holidays and the Prints That Never Happen
  8. A Two-Month Cover for One Shipment Window
  9. The Cost of Sitting in the Wrong Month, Measured
  10. An Alignment Check on a Year of Colombian Shipments
M6 Placing Arabica Cover Ch 67-75
  1. From the Hedge Sheet to an Order a Broker Can Work
  2. Order Types a Coffee Hedger Uses and What Each Risks
  3. Executing Against the Daily Settlement of the Arabica Contract
  4. Clipping a Large Arabica Order Through a Thin Session
  5. The Clearing Broker, the Give-Up and the Account the Lots Land In
  6. Brokerage, Clearing Fees and the Spread Paid to Get Covered
  7. Stating on the Ticket Which Coffee the Lots Cover
  8. Confirmation, Booking and the Overnight Green Position File
  9. The Breaks a Daily Hedge Reconciliation Finds on a Coffee Desk
M7 Rolling Arabica Cover Ch 76-86
  1. Why Cover Outlives the Month Holding It
  2. The Roll Done in Two Legs and the Day Between Them
  3. The Roll Gain a Short Hedge Earns on a Carry Curve
  4. What an Inverted Arabica Curve Takes Out of a Short Hedge
  5. Rolling Out Before First Notice Day
  6. The Roll Across the New Crop Boundary
  7. One Tranche Expiring Against Three Tranches Expiring
  8. Roll Timing When Every Coffee Hedger Rolls the Same Week
  9. A Roll Calendar Built for a Year of Arabica Cover
  10. The Roll That Left the Desk Flat for Two Days
  11. Separating the Roll Result From the Trading Result
M8 Adjusting and Lifting Cover Ch 87-96
  1. Resizing When a Shipment Weight Is Restated
  2. Resizing When an Origin Lot Fails Approval
  3. Lifting Cover as the Coffee Prices
  4. Lifting Cover Ahead of the Fixing and What It Becomes
  5. The Shipment That Slipped a Month and the Cover That Did Not
  6. Cover Standing Against Coffee That Never Shipped
  7. Cover Placed Twice on One Purchase
  8. Partial Lifts and the Record They Need
  9. Cover Lifted Because of Cash Rather Than Judgement
  10. A Full Cover Life Cycle on One Colombian Shipment, Illustrative
M9 The Cash the Cover Demands and the Result It Reports Ch 97-104
  1. Initial Margin as the Price of Holding Arabica Cover
  2. The Daily Mark on an Arabica Short and Where the Cash Goes
  3. Why Correct Cover Reports a Loss When Arabica Rises
  4. Why Correct Cover Reports a Gain When Arabica Falls
  5. The Gap Between a Daily Margin Call and a Monthly Coffee Invoice
  6. Estimating the Cash One Season of Cover Can Demand
  7. Showing a Coffee Financier Why the Paper Leg Lost Money
  8. Reading Both Legs Side by Side on One Statement
M10 What the Cover Did Not Transfer Ch 105-114
  1. What Survives a Correctly Placed Arabica Hedge
  2. Retained Weight Risk After Outturn
  3. Retained Month Risk Between the Print and the Shipment
  4. Retained Preparation Risk on a Natural Position
  5. The Rounding Lot Nobody Put on a Report
  6. Measuring Whether Arabica Cover Worked, in Cents per Pound
  7. Attributing the Gap Between the Green Book and the Paper
  8. Pricing Retained Risk Into the Margin Taken
  9. The Retained Risk Page an Arabica Desk Reports Weekly
  10. Deciding Which Retained Risk to Keep
M11 Judgement, a Worked Season and the Honest Limits Ch 115-126
  1. The Lot That Cannot Name the Coffee It Offsets
  2. Waiting for a Better Arabica Price Is a Position
  3. The Uncovered Share of the Book, Authorised in Writing
  4. A Cover Ratio Written Into an Arabica Hedging Mandate
  5. Judging a Coffee Hedger by the Mandate, Not the Print
  6. A Season of Arabica Cover, Part One: The Green Book in July
  7. A Season of Arabica Cover, Part Two: Sizing and Placing
  8. A Season of Arabica Cover, Part Three: Two Rolls and a Frost Scare
  9. A Season of Arabica Cover, Part Four: The Result Reconciled
  10. Where the Single-Contract Picture Breaks Down
  11. What Selling Lots of Arabica Cannot Protect
  12. Where Robusta, Fixation and Option Cover Take Over

The brochure gives each of these 126 chapters a paragraph on what it covers and what you can do once you have worked through it.

This is course 11 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