Coffee (KC)

The world's wake-up call. Coffee is the second most traded commodity after oil.

2-Minute Beginner Summary

Coffee is grown in the "bean belt" near the equator—Brazil, Vietnam, Colombia. Arabica (premium) trades on ICE; Robusta (everyday) trades in London. Prices are volatile, driven by Brazilian weather (frost, drought), Vietnam harvests, and global café demand. Climate change threatens growing regions.

What Is Coffee?

Coffee beans are seeds from the Coffea plant. Arabica is 60% of production (higher quality); Robusta is 40% (stronger, cheaper).

Why KC Matters

Over 2 billion cups consumed daily. Coffee supports 25 million farming families. Roasters like Starbucks and Nestlé are major buyers.

What Moves the Price?

Top 6 drivers affecting Coffee prices:

Brazilian Weather

Brazil produces 40% of global coffee. Frost, drought, and floods move prices.

Vietnam Harvest

Vietnam is the largest Robusta producer. Harvest timing affects supply.

Currency Movements

Brazilian real weakness makes Brazilian coffee cheaper for exporters.

Certified Stocks

ICE warehouse inventories indicate supply availability.

Climate Change

Rising temperatures threaten growing regions, creating long-term supply concerns.

Consumer Demand

Specialty coffee growth, café culture, and at-home consumption trends.

Market Structure

Spot vs Futures

ICE trades Arabica (C contract). London ICE trades Robusta. Physical coffee trades at premiums/discounts to futures.

Contango & Backwardation

Can show either depending on supply outlook. Backwardation during supply scares.

Key Exchanges: ICE Futures U.S. (Arabica), ICE Futures Europe (Robusta)

Contract Size: 37,500 pounds per contract

Seasonality

Harvest cycles in major producers create patterns.

Peak Months: February, March, July, August

Low Months: October, November, December

Brazilian harvest (May-Sep) often brings price lows. Weather scares in winter hemisphere (July frost risk) cause spikes.

Macro Sensitivity

Coffee is dollar-sensitive. Consumer demand ties it to economic conditions, particularly in the U.S. and Europe.

USD Sensitivity: negative
Inflation Sensitivity: positive
Growth Sensitivity: positive
Rates Sensitivity: neutral

Stock & ETF Exposure Map

Related Stocks

Related ETFs

Key Calendar & Reports

Brazil Crop Estimate (Monthly)

Source: CONAB. Brazilian production estimates

ICO Monthly Report (Monthly)

Source: International Coffee Organization. Global export and consumption data

ICE Certified Stock Report (Daily)

Source: ICE. Exchange warehouse inventories

How to Trade Coffee

ETFs like JO offer exposure. Coffee company stocks (SBUX, BROS) provide indirect access. ICE futures are the benchmark.

Frequently Asked Questions

What's the difference between Arabica and Robusta?

Arabica is milder, grown at higher altitudes, and preferred for specialty coffee. Robusta is stronger, more bitter, and used in instant coffee.

Why is Brazilian weather so important?

Brazil produces 40% of global coffee. A single frost can destroy a year's crop and spike prices.

What is a Brazilian frost?

Cold air from Antarctica can reach Brazil's coffee regions in July, damaging or killing trees.

How does climate change affect coffee?

Rising temperatures push viable growing areas higher in altitude and reduce yields. Some regions may become unsuitable.

What are certified stocks?

Coffee stored in ICE-approved warehouses that can be delivered against futures contracts.

Why is Colombian coffee special?

Colombia produces high-quality washed Arabicas at high altitude. Colombian Milds are premium-priced.

What is the C contract?

The benchmark Arabica coffee futures contract traded on ICE, denominated in cents per pound.

How do roasters hedge?

Coffee roasters buy futures to lock in costs. They may also use options for flexibility.

Glossary

Arabica: Premium coffee species, 60% of production, traded on ICE.
Robusta: Hardier, higher-caffeine species, 40% of production, traded in London.
Washed: Processing method removing fruit before drying. Cleaner flavor.
Natural: Processing with fruit intact during drying. Fruitier, complex flavors.
C Contract: The benchmark ICE Arabica futures contract.
Bean Belt: Tropical regions near the equator where coffee is grown.
Certified Stock: Coffee in ICE warehouses deliverable against futures.
Differential: Premium or discount to futures for specific origins and qualities.
Green Coffee: Unroasted coffee beans as traded in commodity markets.
Cupping: Professional tasting to evaluate coffee quality.