Forex trading coffee

Forex Coffee: Advanced Forex Alerts & Signals for Android

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As we mentioned in the previous section, futures contracts are standardised depending on the underlying asset and the exchange where it is bought and sold. This means that the mechanics of trading coffee futures on arabica and robusta are different. The contract size is 37, lbs. This means that one arabica futures contract is equal to 37, lbs, no more, no less.

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One robusta futures contract is ten metric tons in size and they are priced in USD per metric ton. As with any asset, the price of coffee is influenced by its global demand and supply. Whilst demand and supply can sometimes be difficult to predict, there are certain factors which directly influence both of these things, some of which we will look at in the following sections. For any agricultural, or soft, commodity, the weather plays a huge role in its production and, subsequently, its price.

Adverse weather conditions in a coffee producing region can severely hamper the global supply and, similarly, good weather conditions can lead to bumper crops, boosting global supply. The following price chart of Arabica illustrates this point very well. Date Range: 25 April - 24 April Date Captured: 4 February Past performance is not necessarily an indication of future performance.

On 7 November , indicated by the vertical red line, arabica prices fell to their lowest level in over seven years. This increase in global supply pushed prices downwards, culminating in the low which can be seen on 7 November. However, you will note that in the months following this low, arabica prices surged upwards. This was, again, largely caused by weather in, again, Brazil. This, coupled with the hottest January on record, ruined a great deal of the crop which contributed to the spike in prices which you can see in the chart. Although having a different taste, the two major types of coffee bean remain close substitutes.

This means that changes in the price of one can lead to a change in demand of the other.

Date Range: 1 July - 11 April This change in the difference of price would have made arabica more desirable for those previously demanding robusta and most likely contributed to the subsequent spike in arabica prices in This is an example of how changes in price can cause a switch in demand between the main two types of coffee.

Click the banner below to begin your download and gain access to live price charts like the ones displayed in this article:. Plant disease, like weather, is a potential danger which most soft commodities are at risk of. As we have already seen above, in arabica prices rose steeply. The robusta beans come from a much more resilient plant than that of arabica, which is more delicate.

This means that the plant which bears arabica beans is a lot more susceptible to having its crop ruined by either adverse weather or plant disease, something which should be borne in mind if trading arabica coffee futures. As such, the coffee futures market tends to react very quickly to any hint of these types of situations emerging from one of the main coffee producing nations. These companies primarily purchase robusta coffee and, due to the sheer size of their collective consumption, any change in their demand can affect the price of coffee.

Whilst it is not possible to trade futures contracts with Admiral Markets, it is possible to trade Contracts For Difference CFDs on both coffee and coffee futures. A CFD is a contract between two parties which agrees to exchange the difference in the value of an asset between the date the contract is opened and the date it is closed. Like futures contracts, CFDs allow traders to attempt to profit from both rising and falling prices whilst also benefiting from the use of leverage. Futures CFDs, therefore, allow traders to speculate on the prices of both arabica and robusta futures.

However, as futures contracts do have an expiry date, CFDs on futures contracts will also expire on the same date. The difference being that, unlike futures contracts, CFDs are purely speculative, meaning that if a trader is holding a futures CFD on the expiry date, they are not required to exchange the underlying asset. Moreover, trading futures CFDs means traders are not bound by the same specifications regarding contract size.

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Whereas arabica futures contracts are fixed at 37, lbs per contract, arabica futures CFDs can be traded in increments of 1, lbs. Likewise, robusta futures contracts which are set at 10 metric tons, can be traded in increments of 1 metric ton with CFDs. Open a trading account.

Download the MetaTrader 5 trading platform. Date Range: 15 November - 4 February Trading coffee, and other commodities, can be a good way to diversify your portfolio away from more common assets such as stocks and Forex. You should now be familiar with the commodity coffee, some of the factors which influence its price, the basic mechanics of trading coffee futures and how you can trade them with Admiral Markets via CFDs. If you are new to trading, or want to test a new coffee trading strategy, it is recommendable to practice on a demo trading account prior to heading for the live markets.

Luckily for you, with Admiral Markets, you can do just that. With a demo trading account from Admiral Markets, you can practice trading in real market conditions using virtual currency until you are ready to make the transition to the live markets!

Click the banner below to open an account today:. Admiral Markets is a multi-award winning, globally regulated Forex and CFD broker, offering trading on over 8, financial instruments via the world's most popular trading platforms: MetaTrader 4 and MetaTrader 5. Start trading today! Please be aware that trading CFDs carries a considerable risk of capital loss. Coffee is a liquid soft commodity product, that allows growers and consumers the opportunity to hedge their coffee exposure.

In addition, traders can speculate on the future direction of coffee prices using coffee futures and options as well as coffee CFDs through Markets. The most liquid coffee futures are traded on the Intercontinental Exchange. This contract can be delivered to the several U.

You may sustain a loss of some or all your invested capital, therefore, you should not speculate with capital that you cannot afford to lose. You should be aware of all the risks associated with trading on margin. Crypto Hub. Economic News.

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World ,, Confirmed. Fetching Location Data…. Get Widget. While some use Cofee futures and options to hedge their commodity and assets, others speculate coffee prices. In this article, you will learn all you need to know about Coffee trading. David Becker. Who Trades Coffee? Delivery Points and Growth Locations According to the Intercontinental exchange, there are approximately growth locations that can be delivered to a regulated warehouse. How Does a Commercial Lock in Prices? Speculating on Coffee Prices If you want to speculate on the price of coffee, you could consider buying or selling a futures contract but will need to open up an account with a futures broker.

Summary Coffee is a liquid soft commodity product, that allows growers and consumers the opportunity to hedge their coffee exposure.

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