Did you take your coffee today in the morning? Most people start their day by drinking coffee in the morning. Coffee is an important global commodity because folks just love a good cup of coffee. In fact, coffee is the second largest heavily traded coffee after crude oil.
Just like other commodities, coffee production is dominated by a few countries led by Brazil, Columbia and Vietnam. Now, if you want to know more you can visit the website of International Coffee Organization and The National Coffee Association of USA. How about making money from coffee futures while drinking your cup of coffee? Hey, it's not a bad idea!
The coffee futures market is basically used by the coffee producers and purchasers for hedging from wild price swings. In addition to hedging, the coffee futures market provides small investors to profit from fluctuations in the coffee prices. The most liquid coffee futures contracts are provided on the New York Board of Trade (NYBOT).
NYBOT is one of the most popular commodity trading exchanges especially agricultural commodities. Did you watch the movie," Trading Places." It is all about trading orange juice futures. Eddie Murphy and Dan Aykroyd are small time orange juice futures traders about to corner the market. Though, the movie does not show coffee futures trading but you can well imagine the potential of coffee futures and how important they are in our lives.
The contract ticker symbol is KC and its size is 37,500 pounds with price fluctuation of $0.0005/pound. Trading months are March, May, July, September and December. Because of seasonality, cyclicality and geopolitical factors, coffee can be highly volatile commodity and can experience extreme price swings. These price swings are what futures traders bet on. Now before trading coffee futures do a good research on the coffee market inside out.
Now when you buy coffee, you want the right flavor. Similarly, knowing the different type of coffees available for investment is important. Now, the global coffee production is made up of two types of beans:
1) Arabica coffee is the most widely grown coffee plants in the world. Over 60% of the coffee production is Arabica. Arabica is grown in countries as diverse as Brazil and Indonesia. It is the premier coffee and thus the more expensive variety. It also serves as the benchmark for coffee prices in the world. 2) Robusta accounts for 40% of the global coffee production. It is easier to grow than the Arabica and thus less expensive.
By the way the coffee futures contract traded on NYBOT are based on pure Arabica Coffee. Now coffee is a serious business and you can profit from the coffee craze like the Starbucks that has taken hold of the United States and is spreading rapidly in Europe and part of the developing world like China and India.
Author Resource:-
Mr. Ahmad Hassam has done Masters from Harvard. Know this Fibonacci Retracement Secret method that pulls 500+ pips per trade. Read the story of Richard Samuels, a post office mailman with a head injury and how he made a fortune with these Neutrino Forex Signals.
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