The Coffee Trading Buzz
Welcome back to another week in trading.. how is it October? Today we’re talking about coffee trading, plus we’re looking at the top tradeable events this week. Grab yourself another mug of hot coffee and let’s get into it.
Trading ‘Black Gold’
Coffee is one of the most popular drinks in the world, and partly because of that, it’s become a major commodity traded on global markets. Coffee trading involves the buying and selling of coffee beans for future delivery. It’s a pretty complex and volatile market, but it can also be profitable for traders who understand how it works — which will be you very soon!
Coffee trading isn’t exactly a new thing. It began in the 17th century, when coffee beans were first introduced to Europe. Coffee is now a staple of everyday life for many people around the world, and that’s propelled it to being the multi-billion dollar industry that we know today.
There are two main types of coffee trading: physical trading and futures trading.
- Physical trading involves the buying and selling of actual coffee beans.
- Futures trading involves the buying and selling of contracts for the future delivery of coffee beans.
Futures trading is the most common type of coffee trading. It allows traders to speculate on the future price of coffee beans. Traders can buy or sell futures contracts, depending on whether they believe the price of coffee beans will go up or down.
Introducing the main players
The biggest coffee producers in the world are Brazil, Vietnam, Colombia, and Indonesia. These countries account for over 70% of global coffee production.
In terms of coffee-related companies, the most well-known (and some of the most traded) are:
● Starbucks
● Keurig Dr Pepper
● Nestle
● J.M. Smucker
● Dutch Bros
● Black Rifle Coffee Company
Pros and Cons of trading coffee
Like any commodity or instrument, there are both pros and cons of trading in coffee industry.
The pros:
● Coffee is a highly liquid asset, which means that it’s not hard to buy and sell.
● Coffee is also a global commodity, which means that it’s traded on exchanges around the world.
● The coffee market is very volatile, which means that there are many opportunities to make profits.
The cons:
● Coffee trading is a complex and risky activity, with plenty of unpredictable events that can impact the market negatively.
● Coffee traders need to have a good understanding of the coffee market in order to make informed trading decisions.
● The coffee market can be very volatile, which means that traders can also make significant losses.
When is the best time to trade coffee?
The best time of year to trade coffee depends on a number of factors, including the weather conditions in the major coffee-producing countries, the global supply of coffee beans, and the global demand for coffee (hint: it usually picks up around breakfast time!).
But, if you insist… Generally speaking, the best time to trade coffee is during the harvest season, which usually runs from October to March in Brazil and Vietnam. This is when coffee supplies are at their peak, so prices are usually at their lowest. Supply and demand and all that jazz, etc.
How can brokers attract coffee traders?
There are tonnes of ways that brokers can positively influence traders to try trading coffee or coffee-related stocks, including:
● Offering expert analysis
● Sharing market news and analysis
● Offer trading tips and strategies
● Fun stuff like memes and gifs
Are you a coffee trader?
Are you actively trading coffee? Perhaps you’re still considering it. What do you think the pros and cons are? Any tips? Join the community over at @_contentworks.
Top fundamental events week commencing 02.10.23
Here’s what’s coming up this week in the markets…
Monday
● EUR — German Ifo Business Climate
Tuesday
● USD — CB Consumer Confidence
Wednesday
● EUR — German GfK Consumer Confidence
● USD — Durable Goods Orders
Thursday
● EUR — German Inflation Rate YoY Preliminary
● USD — GDP Growth Rate QoQ Final
Friday
● EUR — Inflation Rate YoY Flash
● Core PCE Price Index MoM; Personal Spending MoM; UoM Consumer Sentiment Index
Here at Contentworks we closely follow market movements and prep content that we think your traders would love to read. Let’s get you started right here.
Speak soon!
The Contentworks team
