Although most might think of coffee as their breakfast-time drink of choice (or in most cases, necessity), its popularity as a lucrative financial instrument has surged in recent years. This soft commodity is well known around the world as a staple of many diets. While coffee’s uses are quite limited outside of the consumption scope, the massive demand for this product has allowed it to become one of the most active futures contracts on the market [for more coffee news and analysis subscribe to our free newsletter].
The average coffee drinker probably doesn’t realize what a huge global business coffee is. As one of the so-called breakfast commodities (along with orange juice, sugar and cocoa), coffee is the world’s most widely-traded tropical agricultural commodity. It is also the world’s second-highest traded commodity, trailing only crude oil [for more commodity news subscribe to our free newsletter].
When it comes time to add coffee exposure to your portfolio, investors may be left with questions as to the best ways to achieve that goal. Trading coffee can be a very lucrative opportunity, as these futures offer strong intraday liquidity that comes attached with enticing volatility. But be warned, trading soft commodities like coffee is not for the faint of heart. Positions can be devastated on a moment’s notice and can create a major headache for traders. Those looking to wade into these waters should always have a profit objective in mind as well as a disciplined entrance and exit strategy. For those looking to make a play on coffee contracts, we detail how to trade futures on this soft commodity [see also The Ten Commandments of Commodity Investing].
While most people think of coffee as their go-to beverage for the morning or a lazy afternoon, its prevalence as a financial instrument has soared in recent years. As a member of the softs family, coffee futures offer heavy volatility and strong liquidity (no pun intended) for those looking to make a trade. As a crop, coffee production is dominated by Brazil, followed by Vietnam, Colombia, and a slew of other emerging markets, though it is the developed markets who hog the consumption. As coffee’s popularity continues to grow, traders looking to make a play will need to keep an eye on a number of factors that drive the price of this hard asset [see also Warning: Ignore Bill Gross’ Hard Money Prediction At Your Own Risk].
Keeping track of the movements of coffee futures can be a tall ordeal. As a soft commodity, coffee is well known for its volatility that sucks a number of traders in. While constantly monitoring blogs and market movements is a useful technique, utilizing the power of Twitter can also be powerful tool in your investing arsenal. Though its professional benefits are often overlooked, following the right people on Twitter can give you up to the minute information on how coffee is behaving and any trends the commodity is exhibiting. Below, we outline seven must-follow coffee Tweeple to ensure you have the best information at your fingertips [see also Warning: Ignore Bill Gross’ Hard Money Prediction At Your Own Risk].
When most people think about coffee, their morning caffeine fix comes to mind, but this commodity also has a large presence in the financial world. As a soft commodity, coffee is a popular trading instrument, as it features strong liquidity and volatile daily movements. The majority of the world’s coffee supply comes from Brazil, though other nations like Vietnam and Colombia also have a large output. From a consumption standpoint, the list is dominated by developed markets like Finland, Norway, and Iceland (on a per capita basis) with the U.S. not making an appearance until number 26 on the list. For those looking to stay up to date on coffee futures and the commodity’s overall environment, we outline five blogs to help give you a leg up on this hard asset [see also Invest Like Jim Rogers With These Three Agriculture Stocks].
This year saw a surge in popularity for commodity investing. As the years have passed, investors have seen the benefits of investing in the risky, but lucrative asset class. Commodities provide a protection against inflation as well as a low correlation to equities. One of the biggest problems within the industry was the lack of options available to investors just a few years ago. It used to be that only those with a complex futures account were able to add these securities to their portfolios. Now, there are hundreds of products to help even the smallest investor gain access to their favorite commodity investment. Below, we outline all of the commodity exchange traded products that hit the market this year [see also 12 High-Yielding Commodities For 2012].