A green coffee offer can be a fixed price or a differential quoted against the C futures market, and the two put price risk on different parties. A fixed price settles the cost now, while a differential leaves the final price open until the contract says it is fixed. Before you compare two offers, check which basis each uses, who decides when to fix, and which delivery term the figure includes.
Two ways to quote the same coffee
In a fixed-price offer the supplier names one price for a stated quantity and delivery term. In a differential offer the price is built from two parts: a reference market, often the arabica C futures contract, and a premium or discount for the quality and origin. The differential is known from the start, but the reference part is not, until it is fixed. Robusta is usually referenced to its own futures market. Neither basis is better in every case, because each one shifts price risk differently.
What a buyer should ask about fixing
If the price is open, the contract should say who has the right to fix, in what lots or periods, against which reference month, and by what final date. Ask what happens if the fixing is not completed in time, and how the fixing will be documented. Without these rules, the word differential describes only half of the price, and the other half can become a dispute.
Compare offers on the same basis
A fixed offer and a differential offer cannot be compared until both are expressed on the same basis. Check that crop year, grade, packing and delivery term are identical, because a premium quoted for one delivery point is not the premium for another. Also check the currency and the payment terms, since they change the real cost to you. Where it helps, ask the supplier to show how a fixed price would be calculated from the differential.
Matching the basis to your own risk
A roastery with fixed menu prices may prefer certainty, while a buyer who follows the market closely may accept an open reference. A buyer who has agreed to a sales price in advance may want the supplier price fixed at the same time. Decide how much price movement your business can absorb, and write that into the request, rather than choosing a basis only because it looks lower at the moment of quotation.
Frequently asked questions
What does differential mean in a green coffee offer?
It is the premium or discount to a reference market price, set for the quality, origin and delivery term. The final price is the reference price plus or minus the differential once the reference is fixed.
Is a fixed price always safer for a buyer?
It gives price certainty, but the buyer accepts the market level at the time of agreement. An open reference moves with the market. The right choice depends on your own cost and selling-price risk.
What should a differential offer state in writing?
The reference market and month, the differential and its currency, the delivery term, who has the right to fix, and the final fixing date. Ask for these before you accept the offer.
Atlas recommends asking every supplier to state the pricing basis, the fixing rules and the delivery term in the same written format, so offers can be compared like for like. Atlas can help set out these questions in your quotation request; price, availability and terms are confirmed only in writing for each transaction.
International Trade Centre — The Coffee Guide, fourth edition (2021), pricing and contracts