Introduction to Soft Commodity Futures SOFT COMMODITY FUTURES
FROM YOUR MORNING COFFEE AND DANISH TO YOUR HOT CHOCOLATE BY THE FIRE, SOFT COMMODITY PRODUCTS ARE A MAJOR COMPONENT OF EVERYDAY LIFE.
By understanding the fundamentals of the soft commodity product futures, traders and end-users can leverage better methods of price discovery and risk management.
Coffee Futures Cocoa Futures Sugar Futures
An investment in futures contracts involves a high degree of risk and is suitable only for persons who can assume the risk of loss in excess of their margin deposits. You should carefully consider whether futures trading is appropriate for you in light of your investment experience, trading objectives, financial resources, and other relevant 01 Rosenthal Collins Group, LLC circumstances. Past performance is not necessarily indicative of future results. COFFEE FUTURES Coffee: An Overview
Millions of people all over the globe begin each and every day with coffee. This commodity is now cultivated in over 70 countries and is a major export commodity.
Types of Coffee:
• Arabica: This type of coffee was originally indigenous to Ethiopia. Arabica is sometimes referred to as mountain coffee and represents the bulk of global coffee production.
• Robusta: This type of coffee has its roots in sub-Saharan Africa and it is often used in espresso and instant coffee blends. Robusta contains greater quantities of caffeine as well as higher antioxidant levels compared to Arabica.
Coffee Use
Although when you think of coffee you likely think of drinking it, there are numerous other potential uses for coffee including:
• Coffee personal care products • Insect repellant • Fertilizer • Flavoring
Investing in Coffee
As a major global commodity, there are numerous ways to invest in coffee. For exposure to today’s coffee markets, you can use multiple vehicles including equities, ETFs and futures.
02 Rosenthal Collins Group, LLC COFFEE FUTURES
General Factors Influencing Price
Although the price of coffee may fluctuate with other soft commodities, the market has its own unique set of supply and demand factors that can influence price movement. The coffee market can be affected by numerous factors both from a local standpoint as well as a global standpoint. Some of these key issues include:
• General economic conditions • Currency market fluctuations • Weather conditions • Global demand • Government and import/export regulations
SOURCE: https://en.wikipedia.org/wiki/Coffee
Other Factors Influencing Price
Looking at the coffee market as a whole, it is important to keep in mind that while there are numerous issues potentially impacting prices (like those listed above), there are also other costs that can affect prices for end-users. Some of these other possible costs include:
• Transportation costs • Insurance costs • Cropstorage and interest costs • Inventory levels
Coffee Jolt Expectations for a poor Brazilian harvest have sent coffee prices to two-year highs amid steadily rising demand.
Brazilian coffee production Arabica-futures prices Global demand