Everything you need to Know about Coffee Trading
Many people have not yet discovered coffee trading’s massive potential, but this commodity remains steady in almost any market condition. In order to maintain a well-balanced portfolio, we recommend that a trader should combine a wide variety of currencies and commodities. Or, as the saying goes, you don’t put all your eggs in one basket.
Some interesting facts about the Coffee market
The coffee market is dominated by supply coming from Brazil, Vietnam, Indonesia and Colombia with Brazil being the market leader. In fact, Brazil produces two times more than its nearest competitor, Vietnam. However, the cheaper cost of the Vietnamese beans provides for an interesting competition within this market.
What influences the prices in coffee commodity trading?
- The South American Arabica beans are considered to be of higher quality and command a higher price. This leaves the Arabica exporting countries subject to competition from companies producing the cheaper Robusta bean, thus creating an interesting coffee trading environment.
- Great impact on coffee commodity trading is also felt by the rise of the ‘fair trade’ bean. Producers are offered a guaranteed set price before harvest. As such, an environment with more privately negotiate deals with co-ops worldwide has been established.
- Coffee is also subject to medical studies. Influencers in fields such as Alzheimer’s, liver cirrhosis, gout and more are heavily researched. In the event of breakthroughs, this could portend an interesting development in the coffee commodity trading market.
- Coffee is key crop in many countries, generating cash inflows in some of the world’s poorest states that depend on coffee for their income. As a result, cyclic pricing emerges due to the changes in nature conditions and their impact on the farmers. Coffee trade is also highly seasonal.
What are the advantages of coffee trading?
Coffee is a steady high-demand market. The rise of the Robusta growing countries have also created interesting market conditions where the balance between quality and cost produces waves. At the same time, the increased demand for ethically sourced coffee forges a premium niche market. All of this makes coffee a commodity that defies prediction, but which can also be very lucrative. In an environment where demand plays an ever increasing role over easy supply and ‘green’ consumerism has steadily emerged, people are willing to pay premium costs for goods, regardless of previous economic indicators. In general, coffee trading is in an interesting state of motion, and given the right strategies, traders should be able to increase their profits.
Coffee trading is a peculiar yet interesting commodity that ensures great opportunities for both beginners and advanced traders. It’s important not to forget that a diverse portfolio is the wise option for any trader.