1. Introduction to Commodities
  2. Commodities: Cocoa
  3. Commodities: Coffee
  4. Commodities: Copper
  5. Commodities: Corn
  6. Commodities: Cotton
  7. Commodities: Crude Oil
  8. Commodities: Feeder Cattle
  9. Commodities: Gold
  10. Commodities: Heating Oil
  11. Commodities: Live Cattle
  12. Commodities: Lumber
  13. Commodities: Natural Gas
  14. Commodities: Oats
  15. Commodities: Orange Juice
  16. Commodities: Platinum
  17. Commodities: Rough Rice
  18. Commodities: Silver
  19. Commodities: Soybeans and Soybean Oil
  20. Commodities: Sugar
  21. Commodities: Wheat
  22. Understanding Commodities Trading

Like cocoa, coffee is a soft commodity. The primary source of caffeine around the world (besting teas, sodas and energy drinks), coffee is the second most sought-after commodity in the world – behind only crude oil – and it’s worth over $100 billion worldwide.

Contract Specifications

Ticker Symbol

KT (CME Globex)

KC (ICE)

Contract Size

37,500 pounds

Contract Months

H, K, N, U, Z

Trading Hours

CME Globex: Sunday – Friday, 6:00 p.m. – 5:00 p.m. (there’s an hour break from 5:00 to 6:00 p.m. each day)

ICE: Monday – Friday, 4:45 a.m. – 1:30 p.m.

Last Trading Day

One business day prior to last notice day (last notice day is seven business days prior to the last business day of the delivery month)

Price Quote

U.S. dollars and cents per pound

Tick Size

$0.0005 per pound ($18.75 per contract)

Production        

While there are single-origin coffee varieties, global coffee futures involve two types of beans: Arabica and Robusta. Arabica beans, which are considered higher quality and the most flavorful, command a premium in the marketplace. Robusta beans, on the other hand, tend to be more bitter – but they do have a 50% higher concentration of caffeine than Arabica beans. Both types grow on small evergreen bushes that mature in about three to five years. Once the bushes blossom, the coffee berry is picked, dried and roasted.

Coffee is grown in more than 50 countries in Asia, Africa, the Caribbean, Central America and South America. Two-thirds of the world’s coffee is grown in the Americas, and 90% of production takes place in developing countries. The top three producers are Brazil, Vietnam and Colombia.

Price Drivers

Any disruption to the supply chain can cause price spikes. Major price drivers include:

  • geopolitical instability
  • climatic factors
  • enterprise trading (the “Big Four” coffee roasting companies – Kraft, P&G, Sara Lee and Nestle – buy about 50% of the coffee produced worldwide)
  • speculator effect (coffee is a highly-traded commodity)

 

 


Commodities: Copper
Related Articles
  1. Investing

    Coffee: The Cost Of A Cup

    A look at what goes into the cost of coffee.
  2. Investing

    Craft Coffee Review: Is It Worth It?

    Learn more about one of the first and most flexible specialty-grade coffee subscription services on the market, a perfect fit for any coffee lover.
  3. Investing

    America's Caffeine Cravings Keep The Coffee Industry Growing

    Five major coffee stocks that have seen very significant levels of growth in the last year.
  4. Investing

    Most Affordable Cups of Coffee

    With coffee playing an important role in social norms, this article looks at the most and least affordable cups of coffee available.
  5. Investing

    The Real Cost Of Drinking Coffee

    How much is your morning jolt hurting your wallet? More than half of Americans drink coffee every day, and the costs add up.
  6. Investing

    The Economics of Owning a Coffee Shop

    Understand the economics of owning and running a coffee shop. Learn the basics of taking into account fixed, variable, and initial costs.
  7. Tech

    A Coffee ICO to Get Your Day Started

    A startup that intends to streamline operations in the coffee industry with blockchain is planning an ICO.
  8. Investing

    Has Coffee Finally Caught A Break? (DNKN, JO)

    Coffee prices have tumbled due to Brazil's weak currency, but a recent rally may inspire some hope. If prices do rise, will Starbucks suffer?
  9. Investing

    3 Best Coffee Stocks for 2017

    Market watchers are predicting a jump in coffee in the next 12 months. If java's your morning jam, try these top coffee stocks.
  10. Trading

    How to Trade the Move in Coffee (JO, SBUX)

    This article will take a look at several major coffee-related assets and outline how traders are looking to profit from the price change in coffee futures.
Frequently Asked Questions
  1. Is it possible for a country to have a comparative advantage in everything?

    Learn whether one country can have a comparative advantage in everything and what the difference between comparative advantage ...
  2. What's the difference between publicly- and privately-held companies?

    Privately-held companies are owned by the company's founders, management, or private investors. Public companies are owned ...
  3. What Are Short-Term Investment Options?

    If you only have a short period of time in which to invest your money, there are several short-term investment options you ...
  4. What are leading, lagging and coincident indicators?

    Leading indicators move ahead of the economic cycle, coincident indicators move with the economy, and lagging indicators ...
Trading Center