Coffee is not just a beloved morning beverage – it is also a fascinating subject in the world
of commodity trading. Here are 10 fun facts that will give you a taste of what makes coffee
such an interesting commodity:
- Second Only to Oil: Coffee is the second most traded commodity in the world, surpassed only by crude oil. This little bean has a big impact on global trade!
- A Truly Global Cup: Coffee is grown in over 50 countries around the world, primarily in the “Bean Belt” between the Tropics of Cancer and Capricorn. Talk about a global industry!
- Brazil’s Dominance: Brazil is the world’s largest coffee producer, responsible for about one-third of all coffee production. When Brazil sneezes, the coffee market catches a cold!
- The Power of Weather: A single frost in Brazil can send global coffee prices soaring. In 1994, a severe frost led to a 60% increase in coffee prices worldwide.
- Two Types Rule the Market: While there are many varieties of coffee, two main types dominate the commodity market: Arabica (which accounts for about 60% of global production) and Robusta.
- Coffee Futures: Coffee futures have been traded since the 19th century. The New York Coffee Exchange opened in 1882, allowing traders to buy and sell contracts for future coffee deliveries.
- The ICO Indicator: The International Coffee Organization (ICO) publishes a daily composite indicator price, which is like a global benchmark for coffee prices. In August 2024, it averaged 238.92 US cents per pound!
- Vietnam’s Rapid Rise: In just a few decades, Vietnam went from a minor player to the world’s second-largest coffee producer, focusing mainly on Robusta beans.
- Currency Impact: The value of the Brazilian Real can significantly affect coffee prices. A weaker Real can lead to increased coffee exports from Brazil, potentially lowering global prices.
- Steadily Growing Demand*: Global coffee consumption increases by about 2% each year
on average. That’s a lot of new coffee drinkers joining the club annually!
These facts showcase why coffee is such a captivating commodity. From its global reach to
its sensitivity to weather and economic factors, coffee offers a perfect blend of elements that
make commodity trading so intriguing. So the next time you sip your morning brew,
remember – you’re not just drinking coffee, you’re partaking in a global commodity
adventure!