Best Coffee Trading Platform May 2025

About Coffee Beans 

Coffee beans are the seeds extracted from the fruits of the coffee tree, and they are the essential component for preparing coffee, one of the most popular beverages in the world. 

Coffee is grown in tropical regions, especially in countries located between the Tropic of Cancer and the Tropic of Capricorn, where the climatic conditions are ideal for the growth of the coffee plant. 

Types of Coffee Beans 

1. Arabica Beans (Arabica): They account for about 60-70% of global production and are characterized by their smooth flavor and mild acidity with low caffeine levels, making them the top choice for coffee enthusiasts. They are grown in high-altitude countries such as Brazil, Ethiopia, and some regions of Africa. 
2. Robusta Beans (Robusta): They contain a higher percentage of caffeine compared to Arabica, and feature a more bitter and strong flavor, which is why they are often used in instant coffee. They are grown in lower-altitude countries such as Vietnam and parts of Africa. 

Coffee Production Cycle 

• The cycle begins with planting coffee trees, which require a moderate tropical climate, rich soil, and medium to high altitudes.
• After the coffee cherries ripen, they are harvested and processed to remove the husk and extract the seeds.
• The beans are dried and roasted before being ground to bring out their natural flavors, with roasting ranging from light to medium to dark according to consumer preference.

Uses of Coffee Beans 

• Coffee Beverage: Roasted and ground beans are used to prepare a wide range of coffee types such as espresso, Turkish coffee, and drip coffee.
• Secondary Uses: Coffee residues are used as natural fertilizer or in cosmetic products.

Global Coffee Trade 

• Coffee is one of the most traded commodities globally.
• Brazil ranks first in coffee production, followed by Vietnam and Colombia.
• Factors such as climate, global demand, and trade policies affect coffee prices, as seen with the recent price increase due to production shortages.

Benefits of Coffee 

• Coffee contains antioxidants and caffeine, which boost energy and reduce fatigue.
• There are potential health benefits when consuming coffee in moderation, such as improved concentration and mood.
• Excessive consumption may lead to negative effects such as insomnia and increased heart rate.

Overview of Coffee Prices 

Coffee is currently trading at around $300 per contract, which is close to its all-time high. 

Coffee prices have risen by 19.5% in the third quarter of this year, marking the second consecutive quarterly gain, due to concerns over production shortages. 

The price target is to trade above the key technical resistance at $330, with the next goal being to reach $350 before the end of the year or in the first quarter of next year. 

Conversion from Contract to Ton 

• Contract = 100 pounds.
• Price per pound = price for one contract ÷ 100.
• A Metric Ton equals 1000 kg and is mainly used in most countries.
• 1 Metric Ton = 2204.62 pounds.
• Weight in Metric Tons = weight in pounds ÷ 2204.62.
• Price per Metric Ton = price per pound × 2204.62.

Upward Factors for Coffee Prices 

• Adverse Weather Conditions: Brazil experienced drought and high temperatures, and Vietnam is facing delayed harvests due to weather disruptions, leading to supply shortages.
• Rising Global Demand: Increased coffee consumption in emerging and developed markets along with the spread of café culture.
• Declining Global Stocks: Lower inventories in major consuming countries like the United States and the European Union increase pressure on prices.
• Rising Production and Transportation Costs: Higher prices for fertilizers, energy, and shipping costs raise production prices.
• Currency Fluctuations: Weaker local currencies in producing countries lead to reduced supply in the international market.
• Market Speculation: Increased activity by investors and speculators supports the upward trend in prices.

Global Coffee Production 

In 2024, global coffee production faces significant challenges in the largest producing countries, particularly in Brazil, which experienced a noticeable decline in production due to harsh weather conditions, Vietnam is facing delayed harvests due to volatile weather, and Colombia is dealing with challenges related to infrastructure and transportation. 

Global production is expected to decline by 3-5% compared to the previous year, raising concerns in global markets as demand increases in emerging and developed countries. 

Global Coffee Stocks 

Global coffee stocks face significant pressure due to production challenges in Brazil and Vietnam, as data shows a continuous decline due to unfavorable weather conditions and producers using reserve stocks to meet demand. 

According to forecasts from the International Coffee Organization (ICO), global stocks could fall to their lowest levels in five years, further intensifying inflationary pressures on prices. 

Global Coffee Demand Growth Forecasts 

Forecasts indicate that global coffee demand will continue to increase at an annual rate of 2-3% until 2030, with Asian and African markets recording the highest growth rates, as consumption shifts from traditional tea to coffee and café culture, along with innovative beverages becoming popular among the younger generation. 

The expansion of global coffee chains and digital marketing strategies also contributes to reaching new consumer segments, despite potential challenges from rising prices or climate changes. 

Key Forecasts for Coffee Prices in 2024 

• Rabo Bank: Expects coffee prices to rise to $300 per contract before the end of the year.
• Investing Heaven: Expects coffee prices to reach $290 per contract before the end of the year.
• Sckden Financial: Expects coffee prices to rise to $310 per contract before the end of the year.
• The World Bank: Forecasts an average coffee price of $320 per contract in 2024.
• International Coffee Organization (ICO): Forecasted coffee prices to be around $300 per contract by the end of 2024.

Factors Influencing Coffee Price Forecasts 

• Weather Conditions and Agricultural Production: Weather in producing countries such as Brazil and Vietnam directly affects coffee production, leading to price fluctuations.
• Global Stocks: A decline in stocks heightens supply concerns, leading to higher prices.
• Global Demand: Increased coffee consumption, especially in emerging markets, drives prices upward.
• Currency Exchange Rates: Fluctuations in local currency values affect production and export costs.
• Geopolitical and Economic Tensions: Supply chain disruptions and higher shipping costs lead to increased prices.
• Investment Fund Movements: Speculative activity may artificially inflate prices.
• Production Costs: Higher prices for fertilizers, fuel, and labor increase production costs.
• Agricultural and Trade Policies: Changes in government subsidies and tariffs affect prices.

Key Price Milestones for Coffee 

• October 2001: Coffee prices hit an all-time low of $42.20 per contract.
• April 1977: Coffee prices reached an all-time high of $339.90.
• October 2001: Coffee prices recorded an all-time low closing at $43.90.
• November 2024: Coffee recorded an all-time high closing at $323.05 per contract.

Best Performance for Coffee Prices 

• Year 1976: Best annual performance with an increase of 157%.
• Q2 1994: Best quarterly performance with an increase of 133%.
• July 1975: Best monthly performance with an increase of 52%.

Worst Performance for Coffee Prices 

• Year 1986: Worst annual performance with a decline of 50%.
• Q4 1986: Worst quarterly performance with a decline of 32%.
• June 1997: Worst monthly performance with a decline of 38%.

How to Invest in Coffee 

Coffee can be invested in through several methods, each with its own advantages and disadvantages: 

1. Direct Investment in Futures Contracts: Futures contracts are the most common way to invest in coffee, traded on exchanges such as the New York Mercantile Exchange (NYMEX). This type of investment is risky and requires a deep understanding of the market and sufficient capital to cover margin requirements.
2. Exchange-Traded Funds (ETFs): They offer a convenient way to invest in coffee without directly dealing with futures contracts. Some popular funds include:
   • iPath Series B Bloomberg Coffee Subindex Total Return ETN (JO)
   • ETFS Coffee (LON:COFF)
3. Investing in Coffee-Related Company Stocks: You can invest in coffee production and trading companies such as Starbucks, J.M. Smucker Company, and Keurig Dr Pepper.
4. Physical Commodities: Buying and storing coffee beans, which requires significant resources and effective management.
5. Trading in Contracts for Difference (CFDs): This allows trading based on coffee price movements without owning the asset, suitable for investors who prefer flexibility and low capital requirements.
6. Long-term Investment: If you believe that global coffee demand will increase in the long run, you can invest in industries related to coffee or its products.

Investment Tips for Coffee: Diversify your portfolio, monitor global markets, and use both technical and fundamental analysis to understand long-term price movements.