As Anthony Grech of IG Index recently reported “It is also important to note that the production of both coffee types, as with any agricultural commodity, is primarily dependent on weather conditions, harvesting practices and disease. Therefore monitoring these variables, particularly in the major coffee producing countries, will provide an understanding of coffee supply and its intrinsic value, when compared with demand”
Key players in the market are Procter and Gamble, Kraft, Nestle and Sara Lee. Together this ‘Big Four’ buys most of the world’s raw coffee. Therefore monitoring the buying habits of these companies would help provide a better understanding of coffee demand. From a micro perspective, marketing and profit margins and also play an important role in driving demand
You can spread bet on both Arabica Coffee “C” and Robusta with spread betting companies like World Spreads and IG Index
Note that coffee is traded in US dollars. That means one of the biggest factors affecting the price is the exchange rate, just like Crude Oil and Gold. Because coffee is traded in US Dollars then, all things being equal, Coffee will tend to follows the dollar exchange rates. If the Dollar goes down against the Euro, the price of Coffee should go up and vice versa.
Finally, it is worth noting that demand for coffee is considered to be price inelastic. This means that when coffee prices increase, individuals do not proportionally reduce their coffee consumption, and when coffee prices decline, consumer demand for coffee does not proportionally rise to any great extent
The above comments do not constitute investment advice and neither IG Index nor Clean Financial accept any responsibility for any use that may be made of them.
IG Index >>
"With IG Index you get all the normal advantages of Spread Betting plus..." >> read
IG Index review.
Risk Warning: Financial Spread Trading and CFDs carry a high level of risk to your capital. You may lose more than your initial investment. They may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.
Article provided / approved by IG Index which is authorised and regulated by the Financial Services Authority (FSA), FSA Register number 114059.
'Spread Betting on Coffee' edited by SD, updated 25-Aug-08
Related Articles:
Commodities Spread Betting, updated 07-Feb-12
A daily look at the Commodities spread betting markets plus a Commodities spread betting comparison, where to spread bet on Commodities markets, find free Commodities charts and...read article: Commodities Spread Betting.
Gold Spread Betting, updated 07-Feb-12
A daily look at the Gold spread betting market plus a Gold spread betting comparison, where to spread bet on Gold, find free Gold charts and...read article: Gold Spread Betting.
Crude Oil Spread Betting, updated 07-Feb-12
A daily look at the Crude Oil spread betting markets plus a spread betting comparison for Brent Crude Oil and US Oil, where to spread bet on Crude Oil, find free Oil charts and...read article: Crude Oil Spread Betting.
Gold Spread Trading, updated 26-Jan-12
Gold Spread Trading - A look at where you can open a Gold spread trading account, where to get live Gold spread trading charts, risk management tips, spread trading examples and...read article: Gold Spread Trading.
Crude Oil Spread Trading, updated 26-Jan-12
Crude Oil Spread Trading - A look at where you can open a Crude Oil spread trading account, where to get live Crude Oil spread trading charts, risk management tips, spread trading examples and...read article: Crude Oil Spread Trading.
Commodities Trading, updated 20-Jan-12
Compare commodities spreads. Compare Crude Oil and Gold spreads. The latest commodities trading news, where to find free Commodities Trading charts and...read article: Commodities Trading.
Spread Trading Commodities, updated 02-Feb-12
An index of commodities trading articles. These commodities articles cover a wide range of subjects such as gold and crude oil trading news, commodities trading strategies, commodity trading charts, commodities prices and a commodities price comparison plus a look at...read article: Spread Trading Commodities.
A) Get free spread betting tips, offers, price updates, important news and more! All Free - Click here!
Risk Warning: Spread betting carries a high level of risk to your capital and you may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.
* Tax law is subject to change or may differ if you pay tax in a jurisdiction other than the UK.
