When you think of commodities, gold and oil take the limelight. However, it’s easy to forget that food staples such as wheat, beef, and soy are also incredibly popular to trade. One commodity that has been soaring in value above them all over the past year is coffee.
We look at this popular bean and why you should be trading this incredible commodity
Trade Coffee
Although many have yet to discover the coffee trading’s massive potential of coffee trading, this commodity remains steady under almost any market condition. We believe that to maintain a well-balanced portfolio, a trader needs to combine a wide variety of currencies and commodities. This way you do not put all your eggs in one basket can diversify your portfolio and protect your investment from risk.
A few interesting facts about the Coffee market
Alongside water and tea, coffee is one of the most popular drinks worldwide with over 400 billion cups consumed each year. It’s a drinking staple that’s consumed globally throughout the year yet more is consumed during winter.
Coffee offers speculators a stable market with high demand. The rise of the Robusta growing countries has also created an interesting market where the lure of quality vs. cost is creating waves. Likewise, the increased demand for ethically sourced coffee is creating a premium niche market. All of this makes coffee a commodity that is difficult to predict, however, it can also be quite lucrative. In an environment where demand is beginning to outstrip easy supply and ‘green’ consumerism is on the rise, people are willing to pay premium prices for goods, counter to previous economic indicators. Overall, coffee trading is in an interesting state of flux, and with the right strategies, traders can increase their profits.
As you can see, coffee trading is an unusual yet interesting commodity that holds great opportunities for both beginners and experienced traders.
It’s important to remember that a diverse portfolio is a smart option for any trader.
The global coffee industry has been hard hit by pandemic-related disruptions; container shortages, port congestion, extreme weather, and inflation are driving coffee prices high.
The coffee market moved from a surplus to a deficit of 5.2 million bags in 2021, yet demand continues to increase. The bottleneck can fuel a cycle of panic buying though a minor sell-off has begun in 2022.
Food prices are at a 10-year high, according to the UN’s Food and Agriculture Organization. With inflation hitting every sector, fueled by huge consumer demand and ongoing supply constraints, and extreme weather, this trend won’t end soon. The risk is particularly high for the energy and food sectors; it’s not as simple as planting new cocoa trees to meet current challenges. This will take some time to remedy and during this period consumers may feel the brunt of rising prices.
What are the advantages of coffee trading?
Coffee is a steady market, with high demand. The rise of the Robusta-bean growing countries has also created an interesting market where the lure of quality vs cost is creating waves. Likewise, the increased demand for ethically sourced coffee is creating a premium niche market. All of this makes coffee a commodity that is difficult to predict, however, it can also be quite lucrative. In an atmosphere where demand is beginning to outstrip easy supply and ‘green’ consumerism is on the rise, people are willing to pay premium costs for goods, counter to previous economic indicators. Overall, coffee trading is in an interesting state of flux, and with the right strategies, traders can increase their profits.
As you can see, coffee trading is an unusual yet interesting commodity that holds great opportunities for both beginners and experienced traders.
It’s important to remember that a diverse portfolio is a smart option for any trader.
While there are multiple ways to access commodities through the financial markets, the most accessible way is through CFDs (Contracts for difference).
CFD trading allows you to speculate on the difference between the current going rate and the price the asset reached when you closed your trade.
This means you can speculate the price of coffee will go up and if it does, you’ll profit. Similarly, you can also speculate that the price of coffee will decline and still profit if you are correct in your assessment.
Therefore, CFDs can provide you with exposure to a diverse range of financial markets without having to own the underlying asset. Even more beneficial is that you can speculate and profit in both trending and falling markets.
Join us at CMTrading and trade on coffee CFDs. Enjoy the best CFD trading experience with an industry leader!