In 1921 the Exchange adopted an amendment to the trade rules, and abolished the one day transferable notice for both coffee and sugar.
Foreign Coffee Quotations
Brazil coffee cable quotations are the market prices, in Rio or Santos, of ten kilograms of coffee, the price being stated in milreis, the monetary unit of Brazil money. The basic grade of coffee at Rio is the No. 7 of the New York Coffee Exchange; and at Santos, the international standard of good average ("g. a.") Santos. One kilogram (often written kilo, or abbreviated to K.) is equal to two and one-fifth pounds; and the ten-kilogram standard of quantity is, therefore, equivalent to twenty-two pounds, or just one-sixth of a standard Brazil bag.
The money value is not so simple, since Brazilian paper currency is unstable; and the milreis quotation means nothing unless it is considered in connection with the rate of exchange for the same day, i.e., the current gold value of the milreis. This gold value is always given with the daily quotations from Brazil, and is expressed in British pence. The par value of the milreis (1000 reis) is 54.6 cents (gold) of United States money; but its present actual value is only about 15 cents, and it has been as low as 111⁄4 cents. Our dollar sign is used to denote milreis, placing it after the whole number, and before the fractional part expressed in one-thousandths. Thus, 81⁄4 milreis would be written 8$250 RS.
Suppose, for example, a Rio quotation is given at 8$400, with exchange at 71⁄2 d. This means that 22 pounds of coffee have a gold value of 63 British pence (8.4 × 71⁄2 = 63.0), or 5⁄3, as the Englishman would write it, which is equal to $1.271⁄2, making the coffee worth 5.8 cents per pound. Of course the person familiar with Brazil quotations will not need to make this reduction to the pound-cent term in order to understand the figures. They will have a proper relative meaning to him in their original form; and it must not be overlooked that it is in this form only that they express correctly the value of the coffee in Brazil. It may make a great difference to the Brazilian planter or exporter whether an increased gold value of his coffee arises through a higher milreis bid or an appreciated exchange, simply on account of local currency considerations. That is to say, the purchasing power of a milreis in Brazil will not necessarily vary exactly as the rate of exchange on London.
London quotations are made in shillings and pence, on one hundred-weight (cwt) of coffee. This "cwt" is not 100 pounds but 112 pounds, one twentieth of the English ton (our long ton) of 2,240 pounds. And in all English coffee statistics the coffee quantities are expressed in this ton. A London quotation of 30/9 (30 shillings and 9 pence) for example, is equivalent to $7.44 for 112 pounds of coffee, or 6.64 cents per pound at the normal rate of exchange, $4.80 to $4.86 the pound sterling.
At Havre, the coffee price is given in francs, on a quantity of 50 kilograms. This is 110 pounds and almost as much, therefore, as the British cwt. In normal times the franc is equal to 19.3 cents. A French quotation of 371⁄2, for instance, means, therefore, $7.19 for 110 pounds of coffee, or 6.53 cents per pound.
The Hamburg quotation (formerly from Brazil per fifty kilos) is made on one pound German, equal to 1⁄2 kilogram, and is expressed in pfennigs. One pfennig is one-hundredth of a mark, and the mark once was equal to 23.8 cents. A German quotation of, say, 31, means, therefore, 7.38 cents (31 × .238 = 7.378) for 1.1 pounds, or 6.71 cents per pound.
Three Kinds of Brokers
In the coffee trade there are three kinds of brokers—floor, spot, and cost and freight.