Quotes of the popular commodity pair COFFEE against USD reflect the value of coffee against the US dollar. The world's main coffee producers are Brazil, Colombia, Vietnam, Ethiopia, and Honduras.
Coffee is traded on various financial markets, including commodity and currency exchanges. However, the most common coffee instrument is a future contract. ICE Futures US is the most well-known platform that provides access to coffee futures trading.
Trading COFFEE/USD requires a deep understanding of market dynamics, as the pair's value depends on many factors. For example, interest rates, inflation, and currency fluctuations can affect the USD value, which in turn affects the coffee rate. Traders should also consider the economic and political conditions in the producing countries, as any changes in production and export volumes will immediately lead to price fluctuations.
Seasonality plays a crucial role in coffee price formation. The rate of coffee production does not decrease throughout the year. However, its consumption level in the summer months is much lower. In this regard, there is a reduction in exports in spring and summer. Demand for coffee gradually increases in autumn and remains throughout the winter.
When compiling a coffee forecast, it is also important to consider the weather conditions. Traders who have chosen coffee as a trading instrument need to monitor weather reports and news in exporting countries. Frosts, floods, droughts, pests, and diseases can destroy a significant part of the crop, reducing the coffee supply on the world market and pushing quotes up.
Risk warning: Trading in FX and CFDs entails high risk of losing capital.
