Coffee is one of the world’s most important cash commodities. Coffee is the common name for any type of tree in the genus madder family. It is actually a tropical evergreen shrub that has the potential to grow 100 feet tall. The coffee tree grows in tropical regions between the Tropics of Cancer and Capricorn in areas with abundant rainfall, year-round warm temperatures averaging about 70 degrees Fahrenheit, and no frost. It takes approximately 4,000 handpicked green coffee beans to make a pound of coffee.
In the 17th century, the first coffee house, also known as a “penny university” because of the price per cup, opened in London. The London Stock Exchange grew from one of these first coffee houses.
Coffee is generally classified into two types of beans: arabica and robusta. The most widely produced coffee is arabica, which makes up about 70 percent of total production. It grows mostly at high altitudes of 600 to 2,000 meters, with Brazil and Colombia being the largest producers.
Coffee futures are traded at the Intercontinental Exchange (ICE), the Bolsa de Mercadorias & Futuros (BM&F), the Tokyo Grain Exchange (TGE), and the London International Financial Futures and Options Exchange (LIFFE).
Arabic coffee is traded at the Intercontinental Exchange (ICE). The stronger of the two types is robusta. It is grown at lower altitudes with the largest producers being Indonesia, West Africa, Brazil, and Vietnam. Robusta coffee is traded on the LIFFE exchange.
Very low prices for coffee can create serious long-term problems for coffee producers. When prices fall below the costs of production, there is little or no economic incentive to produce coffee and coffee trees may be neglected or completely abandoned. When prices are low, producers cannot afford to hire the labor needed to maintain the trees and pick the crop at harvest. The result is that trees yield less due to reduced use of fertilizer and fewer employed coffee workers. One effect is a decline in the quality of the coffee that is produced. Higher quality Arabica coffee is often produced at higher altitudes, which entails higher costs. It is this coffee that is often abandoned. Although the pressure on producers can be severe, the market eventually comes back into balance as supply declines in response to low prices.
Coffee prices are subject to upward spikes in June, July and August due to possible freeze scares in Brazil during the winter months in the Southern Hemisphere. The Brazilian coffee crop is harvested starting in May and extending for several weeks into what are the winter months in Brazil. A major freeze in Brazil occurs roughly every five years on average.
The world’s largest exporters of coffee in 2019 are forecasted to be Brazil with 25.8% of world exports, Vietnam with 20.6%, and Columbia with 9.7%. U.S. coffee imports in 2017 rose +1.5% yr/yr to 27.921 million bags, a new record high. The key countries from which the U.S. imported coffee in 2017 were Brazil with 22.3% of U.S. imports, Columbia with 20.8%, Mexico with 4.7%, and Guatemala with 4.6%.
Virtuse Exchange leverages Digital Asset Collateralized Contracts (DACCs), a model that allows to convert your cryptocurrencies into commodities, without having to move money from one wallet to another. The DACCs act rather like a stablecoin whose value can be pegged with a reliable price feed to the value of USD. You can buy and sell crypto coffee seamlessly and hold it on your private keys.
To trade on coffee prices with Virtuse Exchange, you’ll need to open an account. It takes a matter of minutes, can be done entirely online, and there’s no obligation to fund once you’ve finished your application.
However, you will need to fund before you place your first trade. Funding a wallet account is simple – you can use send USDT, Bitcoin, ETH to your wallet or soon will be able to fund it with a debit or credit card.