What Market Fundamentals Can Affect The Coffee Futures?
The world’s largest producers of coffee are Brazil, Vietnam, Colombia and Indonesia. Brazil and Colombia mainly produce Arabica coffee. Vietnam produces Robusta coffee. Robusta is considered to be lower quality than Arabica. When you are considering a trade in the coffee market some of the basic fundamentals that you should consider are: 1. Brazil Brazil is the world’s largest producer. Brazil is responsible for approximately 1/3 of the world’s total coffee production. Brazil accounts for the majority of the higher quality Arabica coffee traded on the ICE. Thus, developments in the Brazilian crop have a substantial impact on coffee futures prices. 3. Freezes In the summer months (Southern Hemisphere winter) coffee futures are prone to rallies due to freezes or the threat of freezes in Brazil. Freezes affect the Brazilian crop approximately every 5 years. However, in the last 10 years, the threat from the “freeze season” has dropped significantly. After the major freezes in the early an
