Coffee Trading (Facts and Figures)

  1. According to the International Coffee Organisation (ICO), Coffee is the world’s most widely traded tropical agricultural commodity, accounting for exports worth an estimated US$ 15.4 billion in 2009/10, when some 93.4 million bags were shipped.
  2. Two main species of coffee are cultivated today. Coffea arabica, known as Arabica coffee, accounts for 75-80 percent of the world’s production. Coffea canephora, known as Robusta coffee, accounts for about 20 percent and differs from the Arabica coffees in terms of taste. While Robusta coffee beans are more robust than the Arabica plants, but produces an inferior tasting beverage with a higher caffeine content. 
  3. The Coffee C contract (traded at ICE) is the world benchmark for Arabica coffee. Robusta Coffee Futures are traded at Euronext. Other international exchanges that trade coffee futures include the Singapore Commodity Exchange (Robusta), the Commodities & Futures Exchange (BM&F) in Brazil (Arabica) and the Tokyo Grain Exchange (Arabica and Robusta).
  4. South and Central America produce the majority of coffee traded in world commerce. The world’s major coffee producers are Brazil, Vietnam, Colombia and Indonesia. Brazil and Colombia produce mostly Arabica coffee and together account for more than 40 percent of world coffee production. Vietnam produces Robusta coffee.
  5. The world produces about 120 to 140 million 60-kilogram bags of coffee per year (one 60-kilo bag equals 132.276 pounds). Coffee production can vary significantly from year to year, depending whether Arabica coffee trees are in the on-year or the off-year of their biennial production cycle. Simply comparing this year’s output to last year’s may be misleading.
  6. Global consumption in coffee year 2009/10 totalled around 133.9 million bags, of which 72 million bags were consumed in Importing Member countries, 21.2 million in non-member countries and 40.7 million in producing countries.
  7. Consumption has increased on average by around 1.2 percent annually since the early 1980s, rising to more than 2 percent in recent years.  Probably the most spectacular growth of a major market occurred in Japan, where it initially averaged some 3.5 percent a year until appearing to have reached a plateau over the last ten years.  Japan is now the third largest importer of coffee in the world.
  8. Over the last five years market growth in Europe has been weak, with consumption showing signs of stagnation and possibly even decline.  The situation is only slightly better in the United States, where overall consumption, despite the boom in the specialty sector, has grown at a low rate.
  9. The figures for consumption in some producing countries and in non-member countries point to a surprisingly large upsurge since the turn of the century, growing on average by over 6 percent per annum, although the economic turmoil of recent years has been a brake on growth.

This information was taken mainly from the International Coffee Organisation (ICO) were you can find additional information. The International Coffee Organisation (ICO) is the main intergovernmental organization for coffee, bringing together exporting and importing Governments to tackle the challenges facing the world coffee sector through international cooperation. Its Member Governments represent 97% of world coffee production and over 80% of world consumption.

Structure of the coffee trade

I’m currently reading The Coffee Trader (Abacus 2003) by David Liss, and I thought a good idea to share the following information on the structure of the coffee trade that can be found HERE, in case you are interested. Particularly I’d like to highlight the following:

The futures market therefore plays an important role in the coffee trade, as it does with other commodities, by acting as the institution that transfers the risk of price movements to speculators and helps to establish price levels. These markets do not handle significant quantities of physical coffee, although dealers do occasionally deliver coffee or take delivery of coffee in respect of contracts that have not been closed out. Participants in the industry use the futures markets primarily for hedging.

The futures market performs two main functions: Risk transfer and Price discovery. If the market does not comply, we will have to rethink its role, but we should not blame the (futures) market of all evil without even knowing its function.

Estructura del comercio del café

Ahora estoy leyendo El mercader de café (Grijalbo 2003) de David Liss, y me pareció una buena idea compartir la siguiente información sobre la estructura del comercio del café que se pueden encontrar AQUÍ, en caso de poder interesarle. En particular, me gustaría destacar lo siguiente:

Por consiguiente, el mercado de futuros desempeña una función importante en el comercio del café, al igual que con el de otros productos básicos, porque actúa como una institución que transfiere el riesgo de los movimientos de precios a los especuladores y ayuda a establecer niveles de precios. Estos mercados no manejan cantidades importantes de café físico, si bien los negociantes entregan en ocasiones café o aceptan entregas de café en relación a contratos que todavía no han sido liquidados. Los operadores industriales utilizan los mercados de futuros principalmente para operaciones de cobertura.

El mercado de futuros tiene dos funciones principales: Transferir el riesgo y Determinar el precio. Si el mercado no las cumple, vamos a tener que volver a pensar su papel, pero no debemos culpar al mercado (de futuros) de todos los males sin siquiera conocer su función.