Coffee Trading

Coffee Trading Defined and Explained

Coffee is the second most commonly traded commodity in the world (measured by monetary volume), trailing only crude oil as a source of foreign exchange to developing countries according to the International Coffee Organization. Coffee production is forecast to rise to 7 million tons annually by 2010.

Coffee Trading Prices/Rates

Coffee is traded in pre-determined units. The Trading Units are defined as 37,500lbs. Coffee Trading Hours at the NYBOT are 9:15A.M. to 1:35P.M. in Eastern Standard Time. The Price Quotation is in Cents per pound and the Minimum Fluctuation for price is 5/100 cent/pound, equivalent to $18.75 per contract.

Coffee Trading

The exchanges do not participate in coffee price determination. Rather, they provide a visible, free-market setting where coffee traders can conduct futures and options transactions. Since all futures and options contracts are standardized, only price is negotiable. The exchange environment allows coffee prices to reach their natural levels. The Exchanges also disseminate transaction prices all over the world.

Coffee Trading Strategy

Coffee traders should understand that the demand for coffee is price inelastic. The demand for coffee is primarily determined by its price. When coffee prices rise, people do not reduce their coffee consumption proportionally, and when coffee prices fall, consumer demand for coffee does not proportionally increase to any great extent.

Coffee trading Software

Trading software can be used to augment your coffee trading existing approach by giving you a broadened perspective, but having the right tool for the job is critical. The key to a coffee trading system is its ability to forecast moving averages! One of the better software products is VantagePoint trading software that helps you to “see” what is likely to happen in the coffee market before other traders (using only single-market analysis) catch wind of it. Frequently the crossover indicator flashes an “early warning” that the market is likely to make a top or bottom - before it actually happens!

Coffee Major Indicators and indices

Coffee is traded in March, May, July, September, December, January, February, April, June, August, October, and November contracts.

Coffee News

The International Coffee Organization produces statistics on international coffee production and promotes coffee trading among nations.

The International Coffee Organization (ICO) is based in London and consists of 55 coffee producing and consuming member countries.

The USDA presents coffee statistics and information about import and export data.

Coffee Trading Information

Coffee beans are the seeds of cherry-sized berries, the fruit of the coffee tree. The bulk of world production is grown mainly in the tropical highlands of the Western Hemisphere and in the low, hot areas of Africa and Asia.

South and Central America produce the majority of coffee trade in world commerce. Brazil and Colombia, the largest growers of coffees, accounted for about 41% of world coffee production on average.

Coffee Trading History

According to the International Coffee Organization, coffee originated in Ethiopian around 3 A.D., where ground beans were used to season food. In about 1300 A.D., the Arabians first roasted and brewed coffee for use as a beverage. Coffee emerged as a highly valuable tradable spice on many trade routes. Today, coffee is one of the world's most popular drinks and is among the world's most important internationally traded commodities, with a number of economics largely dependent in its trade.

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* VantagePoint's accuracy statistics were computed on out-of-sample price data utilizing neural networks trained on both single market and intermarket data and relate to the Neural Index which indicates whether the average of tomorrow’s typical price and the typical price of the day after tomorrow (both unknowns at this time) are expected to be higher or lower than the average of yesterday's typical price and the typical price of the day before yesterday. The numerical value of the Neural Index, either a one (1) or a zero (0) thereby indicates whether or not the trend direction is expected to be higher or lower for each target market over the next two days. A Neural Network accuracy statistic of 80% does not mean that eight out of ten trades will be winning trades. VantagePoint is not a trading system that gives the same specific buy and sell signals to all users. It is a technical forecasting tool that is comprised of proprietary forecasting indicators that apply neural networks to market data for the purpose of finding patterns and relationships between markets and then using this information to make futuristic forecasts. Using these indicators each trader determines his or her own entries, exits and stop placements which may vary from those of other traders due to differences among traders in trading style, objectives, risk propensity, account size and number of contracts involved, thereby producing different trading results from one trader to another. Futures and options trading involves risk, is not for every trader, and only risk capital should be used. For more detailed information, please read our Important Disclaimer, Privacy Policy, and Software License Agreement.

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