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At the same time, all existing open positions will be executed at the last available market price, as no positions will be carried over to the next CFD contract. Vantage is a member of The Financial Commission, an international organization engaged in the resolution of disputes within the financial services industry in the Forex market. Based on your strategy, open a long or short coffee CFD position on one or multiple coffee markets.

It does well in lower altitudes and hotter climates like in Vietnam, one of the world’s largest producers. Robusta makes up about 30% to 40% of the world’s coffee and trades at about $1.50 to $2 per kilogram in recent times. Coffee falls under the classification of a “soft commodity.” Unlike “hard commodities” extracted or mined from the earth, coffee is an agricultural product.

It is worth knowing that Arabica accounts for around 70% of all coffee in the world and is considered a high quality product. However, it is Robusta that is sold at higher prices, mainly due to lower production volumes and high demand from multinational companies such as Nestlé. The table below shows the basic parameters of trade in these two types of coffee on ICE.

BEST SELLING COFFEE

Since 1990, the annual average differential has increased to $0.523 a pound, with the gap reaching its record high level of more than $1.60 a pound in 2011. The 1989 Agreement collapse was disastrous for many on the commodity’s supply chain. The ICO’s composite indicator price for coffee fell by almost 75% in five years, from $1.34 a pound in 1989 to an average of $0.77 in 1995. The growth in demand for coffee in Europe led to coffee plantations being established in colonies around the world. Today, close to 170 million bags of coffee are consumed globally every year, according to the International Coffee Organisation .

Coffee is the second largest commodity traded by volume, but it is also one of the most volatile. This makes it very interesting for traders since higher volatility also means larger profit potential. While you could go through the time and trouble of opening a futures trading account to get access to coffee trading, it is far faster and more effective to begin trading coffee through CFDs. Be ready to stay at your computer and monitor the markets all day long because coffee futures volatility requires that traders stay on top of their positions at all times. To get started trading coffee futures, decide which type of coffee you want to trade.

• CFDs are flexible instruments that allow traders to speculate on various coffee price fluctuations, whether it’s an upward or a downward movement.
• Overall, coffee trading is in an interesting state of flux, and with the right strategies, traders can increase their profits.
• Meanwhile, coffee becomes cheaper when the dollar falls, increasing international demand.

Arabica also makes up about 60% to 70% of the world’s coffee, a major cash crop from Brazil and Colombia . Arabica coffee beans sell at anywhere between $2.60 and $3 per kilogram in recent times. However, it’s easy to forget that food staples such as wheat, beef, and soy are also incredibly popular to trade. One commodity that has been soaring in value above them all over the past year is coffee. According to IHS Markets, the coffee industry brings in estimated revenues of around $200bn every year, making it a valuable commodity on the global markets. Additionally, the 10% margin offered by Capital.com means you have to deposit only 10% of the value of the trade you want to open, and the rest is covered by your CFD provider.

In this case, contago amounts to USD 5 and directly translates into a position rollover cost of USD 1875 per single contract. An Arabica coffee futures contract covers 37,500 pounds of Arabica, and its price rate reflects the value of 100 pounds of coffee, so the rollover cost is the product of 5 and 375. The purpose of the maintenance margin is to keep your positions open if any or all of them move towards making losses that your deposit and other additional funds in your account cannot cover. Seasons— Most of the world consumes more coffee during the cold winter seasons and less coffee during warmer seasons and summer. An increase in demand for coffee in the colder months of May and September also leads to a rise in the price of coffee. Weather and Climate — Coffee is particularly susceptible to adverse weather and climate changes.

Trading Conditions on COFFEE CFD – #C-COFFEE

As the five largest producers account for around 65% of global supply, weather conditions can have a significant effect on supply and, in turn, pricing. Arabica beans may often be considered higher quality, and you are likely drinking them when you buy a cup of Starbucks coffee. Over the centuries, coffee as a traded commodity has witnessed many ups and downs. In recent decades its price has fluctuated from as high as $3.35 to as low as $0.43 a pound.

That’s partly why coffee is one of the world’s most traded commodities. Coffee CFDs are derivative products that allow you to speculate on the short-term price movements of the coffee commodity. Therefore, CFDs can provide you with exposure to a diverse range of financial markets without having to own the underlying asset. Even more beneficial is that you can speculate and profit in both trending and falling markets. This means you can speculate the price of coffee will go up and if it does, you’ll profit.

Pros and cons of trading coffee CFDs

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Often, your broker will require proof of address and your identification documents. Once approved, you can access all CFD markets on their platform instantly. CFDs give you the option to trade the coffee markets in both directions. Whether you have a positive or negative view of coffee prices, you can take a long or short position to try to profit from the price movement.

Libertex MetaTrader 5 trading platform The latest version of MetaTrader. Start trading by opening a live account here, or practice trading with virtual currency with a demo account. Holding Fees— to hold a coffee CFD position overnight, you’ll pay your broker holding fees. Robusta— Robusta coffee has a more bitter and earthy taste but higher caffeine content.

Robusta beans are slightly smaller and have a stronger and more bitter flavour stemming from their much higher caffeine content. Arabica coffee beans are more oval and flat in shape, and offer a sweeter, lighter and smoother taste. The marketing communication is prepared with the highest diligence, velocity trade fx reviews objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way.

Originally cultivated in Ethiopia in the late 1400’s, the berries were dried, roasted then the aromas were liquidated to be served to kings and sultans. With that the coffee bean started to gain popularity among the Western world. We are all aware of the metabolic effect coffee has on our bodies, counter acting adenosine, a chemical molecule makeup that creates the feeling of fatigue. Markets are in an upward trend when they reach higher highs, and lows and are in a downward trend when they reach lower lows and highs. Traders use technical analysis indicators such as moving averages to identify when to enter and exit positions. Contracts for difference are a form of contract between a trader and a seller that allows the trader to speculate on the difference in an asset price without owning the underlying asset.

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FAQ Get answers to popular questions about the platform and trading conditions. While the Authority has granted a securities or derivatives investment business licence to the Licensee, the Authority does not endorse or vouch for the merits of the products offered by the Licensee. It provides a trusted trading ecosystem that enables clients to achieve their own success, in a faster and simpler manner.

Ensure you use stop losses and limits on all your open positions. These limits are a risk management strategy in case your predictions are inaccurate. As stated initially, leverage can exponentially increase your returns, but only if used right. Leverage is a double-edged sword, and you can incur losses that exceed your capital if you use it without risk management strategies. As we’ll discuss below, coffee CFDs also allow you to trade on margin, which means lower capital requirements.

Clients are strongly recommended to seek independent financial, legal and tax advice before proceeding with any currency, spreads or metals trade. Any information in this site should not be read, interpreted or construed as constituting advice on the part of CMTrading or any of its affiliates, directors, officers or employees. Markets become range bound when they enter a period of price stability within relatively close support and resistance levels. The scalp trade is closed as soon as the technical indicators point to the price changing direction. A good strategy helps you set criteria for when to enter and exit a position without letting emotions get in the way, preventing you from selling in a panic or buying at the top of the market.