Coffee Trading – all the information you need

Not everyone is aware of the amazing opportunities offered by coffee trading. It is a commodity which stays stable under most conditions. Our advice is to have a balanced portfolio, combining many currencies and commodities, as you will hence lower your risk.

Curious elements of the coffee market

This market is chiefly supplied from Colombia, Indonesia, Vietnam and Brazil. Brazil is the main supplier, producing double amounts, in comparison to Vietnam (second largest supplier). At the same time Vietnam production is cheaper. Hence, the competition in this market is of a curious nature.

Parameters important for coffee trading prices

  • While South American Arabica coffee beans are believed to be of higher quality, hence more costly, countries which export these type of beans are not safe from competition with countries selling Robusta beans (which are normally cheaper). This is one of the specificities of the coffee market, which make it unique.
  • Additionally, commodity trading with coffee is changing due to the ‘fair trade’ movement, which is based on offering a guaranteed price to growers. ‘Fair trade’ has led to an increase in deals developed privately around the world.
  • Additionally, there is medical research on the effects of coffee with relation to a number of diseases (like gout, Alzheimer’s and liver cirrhosis). The possibility of a study strongly demonstrating an effect may add a sudden twist in the coffee market.
  • Many countries rely on coffee as their chief crop export. A number of the poorest countries rely highly on coffee, and hence prices are highly dependent on the weather and how farmers are influences. There is thus a distinct seasonality in coffee prices and trading.

What could you gain through coffee trading?

The coffee market is steady. The demand Is constantly high. It is moved by the increasing number of countries growing Robusta, and the balance of quality vs cost is constantly changing. An additional premium niche is evolving due to the rise in appeal of ‘fair trade’ coffee. This is why the coffee market may sometimes be unpredictable. At the same time it has high revenue potential. Demand is rising, supply is becoming more complicated. At the same time ‘green’ consumerism is increasing, and customers eagerly spend high amounts of money on green goods This is not a phenomenon that could be predicted. This is why the coffee market is constantly evolving. A trader could increase their revenues if they use the correct approaches.

This is why the coffee market offers a curious and exciting opportunity for trading, not only for the experienced, but also for beginners. In any case – a smart trader should not shy away from portfolio diversification approaches.

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