Coffee Trading

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Coffee trading is one of the most traded commodities in the world. Coffee trading stands second in commodity trading after crude oil. There might be many of products whose price keeps changing depending on various factors, the prices of coffee do not tend to change much as it is the most important daily need in almost everybody’ s daily routine. Most of the individuals are known to start their day with a cup of coffee. There are usually two kinds of coffee which are traded on the world exchanges.


Trading coffee on Exchanges:

Arabica coffee is the one which is traded in both futures and options. These are traded in the New York Intercontinental exchange which was formally known as the New York board of trade. The size of coffee futures trade is 37,000 pounds and the trades are done electronically. The months, in which the coffee future contract opens in the months of March, May, July, September and December.

The Robusta coffee futures are traded in London on Exchange Euronext.liffe. The size of this contract is 10 metric tons. The prices are quoted in US dollars per metric ton and the minimum price moment shall be of $1 per metric ton.
The other exchanges where coffee trading takes place include The Singapore trading commodity exchange where the trading of Robusta is done, the commodities and futures exchange in Brazil where the trading in Arabica coffee takes place and the Tokyo Grain Exchange where both Arabica coffee futures and Robusta futures are traded.

Tips for trading:

There are a lot of tips that one can find when you look up in the internet for trading techniques. You would find various kinds from different experts. Many of the traders would always suggest not to short coffee when in the months of June-July. The reason is the freezing of temperature across many places around the world. If you take the case of the worlds largest producer Brazil, most of the coffee tress free during that season. This reduces the production of coffee beans and with the existing demand; there are more chances that the prices might increase. Though this is one of the possibilities, one also needs to check other factors before entering into any trade. But many traders do think twice before going short during the months of July.

How Coffee is grown:

A coffee tree is large enough to produce a yield of one pound can of crushed coffee powder. Coffee beans are the seeds in a kind of berries which are in the size of a cherry. Once a coffee tree is planted, it takes about 3 to 6 years for it to give its first yield.

There are number of places where coffee is grown. You can find coffee plantations in Africa and Asia, Southern and Central America, Brazil is the world’s largest producer of coffee along with Vietnam and Indonesia. Arabica coffee is known to be the best quality where as the Robusta kind of coffee is of lesser quality than the Arabica.

United States leads the list when it comes to importing of Coffee. There is an increase in consumption of coffee in US when the winter season occurs. This gives a good support for coffee prices increase.