Coffee is a drink brewed from roasted coffee beans that come from the berries of certain coffee varieties. When the coffee berries change from green to bright red, they are picked, processed and dried. Then the dried coffee seeds (referred to as “beans”) are roasted to differing degrees to get various flavors. The roasted beans are ground and then brewed with near-boiling water to make the drink known as coffee.

Coffee is dark in color, bitter and slightly acidic, and it has a stimulating effect on the human body, mainly due to its caffeine content. It is one of the most popular drinks throughout the world, and it can be brewed and served in various ways, for example, as espresso, French press, caffè latte or filter coffee. It is normally served hot, although chilled or iced coffee is common, especially in summer. Sugar, sugar substitutes, milk or cream are usually used to reduce its bitter taste.

Historical Data Table:

Coffee Historical Price Data

Monthly Change:

Why is coffee important to traders?

The reason could be associated with the huge number of users. As per the latest data, around 2.25 billion cups of coffee are consumed daily, making coffee beans one of the most traded soft commodities globally. As of now, the coffee market is worth about $ 100 billion annually. As a result, it has become one of the most interesting yet volatile investment tools to trade. While some use coffee futures and options to hedge their portfolio, others speculate with it.

Why do investors prefer to trade in coffee?

There are many major reasons for trading in coffee. Let me share some of the most common factors:

Diversification is seen as one of the key factors behind the coffee demand in the forex market. The presence of coffee in an equity-only portfolio can lower the volatility, due to the absence of a correlation between this commodity and other asset classes.

Commodities can act as safe-haven assets, which provide traders with protection against inflation and a declining US dollar in times of global economic uncertainty and market turbulence, like the coronavirus crisis.

Commodities can be highly volatile, experiencing excessive price swings. Trading coffee CFDs is one way to try and profit from drastic silver price fluctuations.

Coffee trading requires some attention, due to the occasional high volatility of the market and a wide choice of available instruments, from coffee derivatives, such as futures and options, to shares in companies involved in the industry.

What factors influence coffee prices?

Trading in coffee comes with a certain degree of volatility, with key factors that influence supply and demand, for example:

How can we trade in coffee:

There are several ways to trade in coffee using the CMC Markets CFD Trading platform: