Coffee

Coffee is one of the most widely traded commodities globally, with annual revenues of $200+ billion. This guide to trading coffee online explains what moves prices, how to trade the soft commodity, plus key trends and facts. Use our ranking of the best coffee trading brokers in 2025:

Coffee Trading Basics

Coffee trading involves the buying and selling of contracts for coffee beans to speculate on price volatility.

The two types of coffee traded are Arabica and Robusta beans:

• Arabica beans are regarded as higher quality and tend to be more expensive. Arabica accounts for 70% of total coffee production and grows predominantly in Brazil and Colombia. It is estimated to trade at around $5.41 per kilo in 2024.
• Robusta beans grow in hotter climates and can withstand more extreme weather conditions. It has a higher caffeine content and a more bitter taste. It is estimated to trade at around $2.11 per kilo in 2024.

The price of Arabica tends to be more stable, whereas Robusta can be more volatile, attracting active traders with a higher risk appetite.

How To Trade Coffee

There are a number of ways to trade coffee in the UK:

• Futures: Futures contracts allow investors to lock in a price at a set point in the future and are often used for speculation or hedging. They are popular due to their high liquidity and high volatility. Futures contracts come with the expectation that a physical exchange of goods will take place which makes them trickier for individual investors. However, most contracts are traded prior to expiration.
• Options: Coffee options can be traded on exchanges like the ICE and NYMEX. Options give traders the right but not the obligation to trade coffee at a specific price and date in the future. Options are often used to limit losses, as it is not possible to lose more than the premium.
• CFDs: Contracts for difference (CFDs) are a straightforward prediction of the direction that the price of coffee will move. Traders will either earn or pay the difference between the opening and closing of the contract. CFDs are offered by many retail brokers along with leverage, allowing traders to boost their purchasing power with a small upfront investment. Both long and short positions can be taken with coffee CFDs.
• Spread betting: Like CFDs, spread betting also involves making a call on the underlying price movement of coffee. Spread betting can only be executed over the counter (OTC) and profits are usually tax-free in the UK. Spread bets are particularly popular with short-term traders. CMC Markets is the best UK broker that offers spread betting on coffee.
• Stocks: Trading stocks in coffee production companies is not easily accessible as most firms are privately owned. However, investors can buy shares in companies involved in the refinement and sale of coffee-related products, including Starbucks, Nestle, and JM Smucker.
• ETFs: Exchange-traded funds (ETFs) can be used to trade coffee similar to stock trading. They are traded on an exchange and track the performance of a group of commodities or companies. ETFs are often used as a means of spreading risk and diversifying portfolios. One of the most popular coffee ETFs is the iPath Dow Jones-UBS Coffee Subindex Total Return ETN.

Today’s Price Chart

History Of Coffee Trading

Coffee trading can be traced back to the Ethiopian peninsula as early as the 15th century. As its popularity grew, it moved east to the Arabian peninsula, on to Europe in the 17th century, and in the mid-1600s, it arrived in New York.

In the 16th Century, Istanbul became the coffee epicentre of the world. The opening of the first coffee house in 1553 was quickly followed by many more. As the popularity of the beans grew, competition between regions grew. It became a valuable commodity and was exchanged for a range of goods and currencies.

Some of these early coffee houses went on to become large financial institutions, such as Lloyds of London.

Today, coffee is mostly cultivated in Central and Latin America, Africa, Southeast Asia and India. Brazil is the largest producer of coffee in the world, accounting for close to 50% of all coffee production globally.

More than 2 billion cups of coffee are now consumed every day.

Factors That Affect The Price Of Coffee

• Environmental changes: The climate can affect the supply of coffee beans which can in turn affect the price. For example, if there is a frost that wipes out all the coffee plants in a particular region, supply will decrease. This is what happened in the winter of 1977, when prices soared to 339.86 cents, up from 45 cents just two years earlier. Climate change is likely to have a big impact on coffee prices over the decades to come as extremes in weather wreak havoc on agriculture.
• Politics: Geopolitical events can also affect coffee trading prices. Disruption of global supply chains can lead to price hikes. Coffee is grown in regions prone to political unrest, including Brazil, Columbia, Honduras, and Ethiopia.
• Oil prices: When the price of oil rises, transportation costs increase, which can be reflected in the market price of coffee. The soft commodity often travels great distances, from the fields in Brazil to coffee shops in London. Long supply chains mean that any changes in transportation costs can have a large impact on coffee prices.
• Disposable income: Unlike other soft commodities like wheat, coffee is not a necessity. As a result, economic downturns and a squeeze in household incomes may lead to a fall in coffee demand.
• Consumer trends: The price of coffee can be affected by consumer trends and perceived health advantages (or disadvantages). If coffee consumption rises to the same level as tea consumption in countries like China, demand, and in turn prices, may rise.
• Price of the US dollar: As coffee is primarily priced in dollars, fluctuations in the strength of the US dollar will impact the price of coffee. As the dollar rises, coffee prices tend to fall, and vice versa.

Why Trade Coffee?

Like oil, gold and silver, coffee has many characteristics that make it an attractive commodity for traders:

• Trading vehicles: There are multiple investment vehicles that can be used to trade coffee including futures, options, CFDs and ETFs. Each caters to different trading strategies and investment goals, for example, CFDs are popular with short-term traders and ETFs with long-term investors.
• Volatility: Coffee is a volatile commodity. Its price is influenced by a number of factors which can make it difficult to accurately forecast prices, including climate and geopolitics. However, this volatility provides opportunities for traders with a healthy risk appetite.
• Volume: Coffee is a staple part of the food and beverage industry and the most consumed drink globally. As a result, coffee is traded in huge volumes, meaning traders can fill orders with low fees.

How To Compare Coffee Brokers

Key comparison points when choosing between coffee trading brokers, platforms and apps include:

• Fees: Look for tight spreads, low commissions and overnight charges, plus no inactivity fees. Pepperstone, for instance, offers coffee CFDs with an average spread of 0.4 pips, 1:10 leverage for UK traders, and a contract size per lot of 10,000 lbs.
• Security: The top brokers with coffee trading in the UK hold a license with the Financial Conduct Authority (FCA). Also check for negative balance protection and a secure platform and trading app.
• Usability: Active coffee trading strategies require a stable and reliable platform. Check for fast execution speeds, no slippage and mobile compatibility. MetaTrader 4 and/or MetaTrader 5 are offered by most leading coffee brokers.
• Customer support: Beginners, in particular, will prefer a brokerage with good customer support via live chat, telephone, email or online query form. Both XTB and CMC Markets, for instance, offer 24/5 customer support.
• Added features: The best coffee brokers offer analyst insights and data into coffee trends. Their economic calendar may also highlight relevant announcements and reports, for example, output projections in key producing countries like Brazil and Vietnam.
• Opening hours: Coffee trading times vary between exchanges and brokers but typically run Monday to Friday, 09:15 to 18:29 (GMT).

Bottom Line On Coffee Trading

Coffee continues to be a popular commodity for online trading. It is a highly liquid and volatile asset, presenting opportunities for the right trader. Some of the most popular coffee trading vehicles available today include CFDs, futures, options and ETFs. Get started by signing up with one of the best coffee brokers.

FAQ

Article Sources

S&P Global coffee market analysis

Coffee price data and volumes

CMC Markets coffee trading guide