Deciding when to contract green coffee bags starts with understanding how a contract works and why it can be a powerful tool for roasters. Knowing the basics will help you secure quality coffee, manage costs, and build a reliable sourcing program. Learn how a coffee contract works, when it makes sense to have one, and how to approach contract negotiations strategically.
Coffee Contract 101
A contract is an agreement to purchase a specific coffee at a set price, quantity, and a delivery period. At Royal New York, we work with two primary forms of contracts:
- Fixed Price Contract: The final price is agreed upon by the customer and trader at a full $/lb. marker at the time of purchase.
- Price to be Fixed (Differential): The contract is placed on a differential price, which is the price of the coffee, minus the price of the market (for example, +$1.50 over a current ‘C’ market.). At a later date, that differential would then be added to the current market to achieve the final price of the contract.
Knowing the difference between the two can help you understand how to price out your contract.
Timing, Pricing & Availability
Availability and pricing are the primary motives behind most contract decisions. High-demand coffees, or micro lots, can disappear quickly, so contracting ensures access to the lots your customers expect. Understanding price cycles, harvest timing, and market trends will also help you avoid both overpaying and scrambling for substitutes when the market thins.
You should ideally approach contracting as a strategic tool rather than a last-minute necessity. This will help you create a more stable, resilient sourcing program. It will also allow you to adapt to new coffees and market shifts.
Pros & Cons of Contracting Coffee
Contracting can be especially beneficial when capturing a down market, locking in pricing before it climbs, or securing coffees that only export once or twice a year. External factors like port strikes, political instability, or unexpected logistical delays can also disrupt supply. This makes early contracting a strategic maneuver.
That being said, contracts aren’t always the right choice. Roasters who prioritize flexibility, are still dialing in their menu, or don’t have reliable volume projections may prefer buying spot to avoid overcommitting. While the pitfalls of contracting often relate to locking in too much, too soon, the advantages include price stability and supply security.
Managing Your Coffee Contract
Most of the time, traders will use your burn rate to determine how many bags to contract. By using this information, they can make sure you refrain from contracting too much or too little. You can also use RNY Bean Logic™ to figure out how much you’ll need.
Learn how Bean Logic can help you determine your burn rate.
Requesting Reserves Online
If you have an idea of what coffee you want to contract, you can use the “Request Coffee Reserve” button on the offerings page or on your My Account page. This can be a good first step to begin the coffee contract process with your trader. Fill out what coffee you’d like to request, which reference #, how many bags, and for how long. Add in anything else your trader should know, and hit the “Request Reserve” button. Once submitted, you will receive an email confirming that we’ve received your request. Please keep in mind that this is only a request—your reserves are not yet confirmed. Your trader will reach out to discuss the information you provided and take it from there.
When you’re ready to commit to a contract, it’s essential to read your coffee contract and make sure it reflects the terms you discussed with your trader, i.e., bag quantity, contract duration, price, etc. Verifying each detail upfront helps protect your planning, budget, and inventory expectations.
Final Thoughts
Now is the time to go over your 2026 forward planning. Feel like contracting coffee makes sense for your business? Connect with your trader to see if this is the best path for your sourcing strategy.
