When you trade coffee, it is likely that you will be trading coffee futures. These are contracts in which you agree to exchange a set amount of the underlying commodity at a set price on a set date. These contracts are traded on futures exchanges – it’s important to use the right exchange for the coffee benchmark you’d like to trade.
How does coffee trading work?
Trading coffee is commonly done through futures contracts, wherein two parties (the buyer and the seller) agree to exchange an amount of coffee at a set date and price. Futures are often used by coffee producers and consumers as a hedging strategy.
How does demand affect coffee futures?
Because of the volume of coffee these enterprises purchase, any changes in their demand can affect the prices of coffee futures. The Arabica bean may be considered higher quality by some in the coffee industry, and you're likely drinking Arabica bean coffee when you buy Starbucks or other premium coffees.
What is the coffee commodity trading market?
The coffee commodity trading market has a long history. Coffee was traded and consumed in the Middle East as far back as the 15th century. By the 17th century, coffee houses were popular among merchants in Europe as places to meet and discuss trade.
