A reader wrote to author Nguyễn Quang Bình to ask about some of the terms frequently seen in coffee market reports. Recognizing that others may have similar questions, Mr. Nguyễn Quang Bình responded and shared the answer on Giacaphe.com as follows:
Question:
Dear Mr. Nguyễn Quang Bình,
I am new to the coffee market and have read several market reports, in which there are some abbreviations I do not understand. I do not know who to ask! If you have time, could you please explain?
The abbreviations are: ETP, ETS, TAS, SPREADS, CALL, PUT in the reports. Also, what do these terms mean in relation to the transaction volumes (lots)?
Thank you.
Best regards,
DUC TRAN
Answer:
Hello DUC TRAN,
Although your question wasn’t very clear, I believe you are asking about the trading volumes and the terminology used in futures and options markets.
At the end of each trading day, each exchange publishes a summary of the trading volume, which includes the volume of new trades (outright) by large speculators, smaller traders, commodity businesses (referred to as “non-commercial” and “speculators” in English), and coffee roasters, which are called “commercial” or “industrial.”
Here are the terms you asked about:
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EFP (Exchange For Physicals): This is a swap between paper contracts and physical contracts, allowing participants to exchange futures contracts for actual physical goods. It’s sometimes also referred to as AA (Against Actuals).
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EFS (Exchange For Swaps): A type of transaction swap between futures contracts and cash settlement.
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TAS (Trade At Settlement): This allows participants to buy and sell at the settlement price, which is typically the closing price of the day.
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SPREADS: These are contracts that involve trading the price difference between two contracts, such as buying and selling the difference between May and July contracts for 2015.
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CALLS and PUTS: These are options contracts. “Call” is for buying, and “Put” is for selling.
Additionally, it’s important to note that in the coffee market, “industrial” should be referred to as “roasting” rather than “industrial buying,” which can be vague. It should be termed “roasting purchases.”
Hope this clarifies your question!