No coffee can be submitted for tendering without having first obtained a certificate of grade and quality from the exchange. All coffee submitted for certification is examined by a panel of three licensed graders. The examination is blind, or neutral, as the graders know the country of origin but not who submitted the sample. The quality is determined on the basis of six evaluations and measurements:
Brazilian arabica will be deliverable effective with the March 2013 expiration. This means that in future both washed and semi-washed Brazilian arabicas may be tendered but the Exchange has not addressed this directly. Instead it has added a new standard to the Rules as follows:“Coffee ‘C’ shall consist of one (1) growth, in sound condition, free from all unwashed and aged flavours in the cup, of good roasting quality and of bean size and colour in accordance with criteria established by the Exchange.”The reference to ‘aged flavours’ is not linked to Brazilian arabica but refers to all growths and is accompanied by simultaneous changes in the age penalties that Exchange graded tenderable lots incur after a certain period of storage, also effective with the March 2013 expiration.If a lot is passed the exchange will issue the certificate, which includes a complete rating on any grade imperfections. One appeal against rejection is possible on each lot with the whole process repeated by five graders instead of the original three. The appellant has the option to submit a new sample or to run the appeal on the original sample. It is quite normal for coffee that grades well but has failed on cup to be appealed automatically in the hope that the unsound cup in the first test was an anomaly.The certificate establishes the basis, or standard, deliverable for these growths. Each growth is allowed a maximum of 23 imperfections (out of 350 grams), with a deduction of 10 points for each full imperfection by which it exceeds the number permitted in the basis. Sample size is 5 lb for parcels up to 300 bags, 8 lb for 301–500 bags and 10 lb for more than 500 bags.Exchanges continuously monitor cash market conditions and adjust contracts or create new ones to reflect those changes. This reflects the fundamental relationship between cash and futures. If the futures market does not accurately represent the cash market, then it cannot perform its primary pricing functions. As an example, in recent years the ‘C’ contract added Panamanian coffee to its tenderable growths, reduced the discount for a number of other growths and added European delivery points. In addition, new grading procedures as well as changes in bagging standards have been implemented.