Coffee trading knowledge Coffee Futures Price increase

Coffee futures trade in coffee beans, and futures are both an investment and an indication that coffee will rise. Coffee's rise is not only due to its origin, good or bad, but also for many reasons. In the coffee futures market, the main factors affecting the price of coffee beans can be summarized as follows:

1. Supply changes: Supply and demand have a certain impact on prices, supply changes will become a decisive factor in short-term price changes, the main focus of the market in Brazil, Colombia... and other major producing countries. Although Brazil is not ICE's delivery target, because of its large production, its production supply has also become a cause of fluctuations in coffee bean prices.

2. Climate and pests: plant growth will be subject to climatic conditions and pests, coffee trees are the same, although most countries in Latin America mild climate, rainfall is very stable, but because of Brazil's rich production, so it is very important in the coffee field status, June to July of each year is Brazil's frost season, and frost damage has become one of the factors affecting prices. Arabica beans are also affected by pests, especially in the Eastern Hemisphere, but in recent years pest control techniques have improved and the cost of pest control has decreased, so the problem of pests has also decreased a lot.

3. Government policies and measures of international coffee organizations: coffee bean producing countries implemented by the government policy is also one of the focus of attention in the coffee market, government policy changes will also affect coffee production and marketing, especially the largest producer Brazil has the most influence. When the Brazilian government decides to stockpile large amounts of coffee beans, it drives up the price of coffee beans in the short term, whereas releasing large amounts of coffee beans lowers the price of coffee beans. Although Brazil's government policy seems to have a large impact, when it stocks coffee beans in large quantities, it will increase the coffee market share of other coffee producing countries such as Colombia. Therefore, the International Coffee Organization (ICO ), which is composed of producing countries, sets the total export volume of coffee and the export quotas of each country to control the supply and maintain the price of coffee beans.

4. Strikes and market rumors: When major export dock workers strike or strike rumors, it will generate market expectations and lead to an increase in stocks, which may also lead to a short-term coffee bean price rise, and coffee beans are mainly produced in developing countries. Market rumors such as strikes are heard from time to time, so it is easy to have a temporary impact on prices.

5. Seasonal factors: Winter in the Northern Hemisphere is the season of greatest consumption of coffee beans, and thus inequality between supply and demand can lead to price spikes. In addition, because Brazil has a coffee harvest period from April to August, any large-scale seasonal weather damage during this period or at other times is likely to lead to a surge in coffee prices. Usually, there is a high probability of a low price in June and July of each year, and then it will slowly stabilize until it may reach a high price in January and February.

Coffee beans are second only to crude oil in global trading volume, belonging to bulk trade materials, and their price fluctuations are more important to the political and economic stability of producing countries, thus becoming a global speculative commodity. According to the calculation of the producing country, the price of coffee beans per pound needs to be higher than US $1 for small coffee farmers to have a profit to recover. Therefore, when coffee beans fall below the US $1 threshold, it will cause tension in coffee producing countries and implement measures to store leftover beans. It also makes many investors interested in buying and selling coffee beans.