Coffee – A Hot Commodity in World Trading

In world trading, coffee is an incredibly hot commodity. In fact, coffee is the second most traded commodity in the entire world, coming in second to only petroleum. Coffee is traded more than even popular products such as coal, sugar, wheat and even meat.

The global harvest of coffee does vary somewhat each year and this is contributed to for several different reasons. One of these reasons is that how well coffee turns out each year is very dependent on the weather in the location that it is being grown. The result of this very much affects how much coffee is grown and how much the price of coffee ends up being.

Therefore, how much the cost of coffee is can change every single year and rarely stay the same. You cannot determine ahead of time exactly how the weather is going to affect a coffee crop.

Coffee can be a hard product to farm. This is because you can never judge exactly how good a crop of coffee is going to turn out. There is so much left to chance when you are a coffee farmer.

This is where what is known as a “Coffee Agreement” comes into play. The Coffee Agreement is an attempt at keeping the price of coffee somewhat stable between the supply of coffee produced and the demand of what is cultivated.

Unfortunately however, the Coffee Agreement has not worked very well. The International Coffee Organization used to control every Coffee Agreement. This was created back in 1962 in London. However, in 1989, every Coffee Agreement was disbanded because many producers as well as the consumers have different ideas of what they wanted to see happen.

The end result of the disagreements and disbanding of the Coffee Agreement was that coffee now became a free trade commodity.

The export of coffee is an interesting process. First, the coffee beans produced are sorted and then graded. After this, they are sold to exporters and these same exporters in turn sell the beans to various importers of coffee throughout the whole world. An importer ships the coffee beans to the country that is purchasing them so that they can be sold to roasters.

The roasters pick the coffee of their choice to purchase, however they first want to ensure that the beans have an excellent flavor and are of good quality. They can determine the quality and flavor by doing what is known as cupping. Cupping is a process where samples of the beans to be purchased are roasted and ground. Tiny amounts of the ground beans are then put into a cup and hot, boiling water is pour over the top.

A coffee cupper is a very highly trained professional in this method and they at this point smell as well as taste the coffee to determine if it is a good buy for the roaster.

The coffee beans are package in bags that state the grade of the bean, the country they come from and the method used to process them. When the whole coffee process reaches this point, the beans are often placed into bags that will allow them to stay dry. The beans are then shipped to various warehouses where they stay until it is time for them to be shipped.

Although millions of people all over the world drink coffee on a daily basis, they rarely if ever give thought to what goes into the trading of this much loved commodity. It is no surprise really that coffee is one of the worlds premier trading commodities when you think about how popular the brew is.