For the fixation of the price of the coffee it is used as frame of reference the price that prevails at the moment of the negotiation, in London for the Robust ones or in New York for the Arábicas. This price will be the base to determine the final price, that it can be seen increased or diminished based on the quality of the coffee that we are negotiating.
For example, if one is quality a Arábica coffee, in if the price of stock market is of 75 cts/frees, we upper pay a price by this coffee. To this variant differential is denominated and it is modified in function of the supply, the demand and the availability.
If on the contrary the negotiation of purchase is of a coffee of smaller quality, we will have a differential of discount on this frame of reference of stock-market and therefore we will pay less money by kg. Amount fixation of and price can be made purchases to future with, or only fixing the amount to leave the price more ahead.
All the coffee is paid in dollars, therefore we can fix the dollar to the moment of the purchase or for waiting for the moment that we consider more opportune. The terms are habitually of payment to the arrival, the entrance in warehouse or against documents. In this last case the payment takes place before the arrival, since the documents travel in airplane whereas the coffee does in boat.
When the purchase is spot usually is paid to the arrival or to a maximum term of seven days. In addition to the normal stock-exchange swings there are other factors that can alter the prices of stock market. During the period of May to end of July, the market of the coffee is pending daily of the meteorological evolution of Brazil, since the risks of frosts affect the prices of stock-market quickly. The same it happens in prolonged periods of drought. The remembered examples more are the frosts of 1976 and 1994 and the drought of 1986. In these years the coffee got to multiply until by six the price of quotation in stock market.
Another important factor is the evaluation, by means of the flowering, the volume of the next harvest, mainly in the Brazil, that takes place between the months of November and December.