Everything you need to Know about Coffee Trading
Coffee trade remains stable in almost all market conditions, although many people are still unaware of the enormous potential of this product. We are convinced that the trader should combine a wide variety of currencies and commodities to maintain a well-balanced portfolio. That way you don't put all your eggs in one basket.
A few interesting facts about the Coffee market
Coffee market is mainly influenced by the supply coming from Brazil, Vietnam, Indonesia and Colombia, as Brazil has a leading role.In practice, Brazil produces twice as much as its biggest competitor -Vietnam. However, the lower price of Vietnamese coffee beans creates an interesting competition within this market.
What are the factors that affect the prices of commodity trading with coffee?
- It is considered that the South American Arabica coffee has a much
higher quality, dictating a higher price. This, however, creates an interesting
climate in the coffee trading area, leave the Arabica exporting countries open
to competition from those companies producing the cheaper Robusta bean.
- Coffee commodity trading is also being strongly influenced by the growth
of the ‘fair trade’ coffee beans. Coffee trading prices are also affected by
the fair price given to farmers prior to harvest, which creates another
competitive environment with negotiating features outside the trading market
that must also be taken into account.
- Coffee is being subjected to medical research due to its effects on
diseases such as Alzheimer's, liver cirrhosis, gout, etc. This could mean, in
the case of substantial scientific achievements, an interesting stimulation of
the coffee bean market.
- Coffee is the key agricultural crop in many countries, with the revenues
of some of the world's poorest countries heavily dependent on coffee trading. This
does lead to cyclic pricing, due to the seasonal nature of the commodity and
weather conditions during the harvest period and their impact on farmers.
Coffee trade is also highly seasonal.
What are the advantages of coffee trading?
Coffee trade is a stable market with great demand. The rise of the countries producing Robusta has also created an interesting market where the lure brought about by the ratio between quality and cost creates fluctuations. Also, the increased demand for coffee produced according to ethical standards creates a superb market niche. All this makes coffee a commodity that can hardly be predicted, but can bring significant income.In an environment where demand is beginning to outstrip easy delivery and 'green' consumption increases, people are willing to pay premiums for commodities that run counter to past economic performance.Ultimately, coffee trading is in an intriguing state of constant change and by applying the right strategies, traders can increase their profits.
As you can see, coffee trade is an unconventional but interesting commodity that has great potential for beginners as well as experienced marketers. It is important to remember that a diverse portfolio is the intelligent solution for every trader.