Deeply ingrained in Western tradition, drinking coffee has become a daily ritual for many. A morning cup of java provides the drinker with the pep or get up and go necessary to face the coming day. The active ingredient, caffeine, is a natural stimulant.

Coffee has been popular in the Middle East, Persia, Turkey and North Africa for centuries with its appeal spreading to Europe and the Americas. Today, the demand for coffee continues to spread around the globe.


Asia is consuming more of the beverage as coffee demand increases at the expense of tea.

The two types of coffee consumed around the world are Arabica and Robusta.  Arabica coffee accounts for 75-80 percent of all coffee beans produced. Arabica beans grow on an evergreen bush or tree (Coffea arabica) which is indigenous to the mountains of Yemen. Brazil is currently the world's largest producer and exporter of this type of coffee. Robusta coffee beans contain more caffeine than Arabica beans. Robusta coffee is indigenous to West Africa and also grows in Java, in Indonesia. Robusta beans generally produce Italian-style espresso coffees. Vietnam is currently the world's top producer of Robusta beans while Brazil is second.

Coffee producers pack beans in 69-kilo (152 pound) bags. In 2011, total global coffee production was approximately 131 million bags. Brazil supplied 33% of global production of all beans. Vietnam, Columbia, Ethiopia, Indonesia and India are all important producing nations accounting for almost 80% total annual production of Arabica and Robusta beans in 2011.

The process of harvesting coffee involves picking coffee berries either by hand or with machines and then exposing the seed, which is the bean. Coffee producers then ship the beans to processors often known in the coffee business as roasters. Different styles of roasting beans will produce coffees with different flavors. In the final step of preparation, coffee beans are ground.

Coffee buying is a highly specialized skill. Buyers from all over the globe will travel to producing countries to smell and taste different coffee beans from a variety of producers. The finest beans command the highest premiums. The top coffee consumer in the world is by far the European Union, which imported 70 million bags in 2011, more than half of total worldwide production. The United States was the second largest importer that year, importing around 24 million bags. Japan and Switzerland are also major importers.

European taste buds prefer Robusta beans while Americans tend to drink Arabica blends. The price of coffee can be very volatile depending upon growing conditions in producing countries. Leaf-rust is a devastating disease that can ruin crops. Robusta coffee has a higher resistance to leaf-rust than Arabica coffee.

Over the past forty years, the price of Arabica coffee has traded as high as $3.3750 per pound in April 1977 and as low as $0.4525 per pound in April 1975. Recently coffee traded up to $3.0625 in April 2011 before falling to $1.0095 in October 2013. Each year the price of coffee is the result of the success or failure of the harvest. In early 2014, the price of coffee soared as a drought affected Brazilian crops.

The Intercontinental Exchange (ICE) offers futures contracts on Arabica coffee. Countries and regions exporting superior coffee command premiums to the ICE futures price while those producing inferior grades of coffee trade at discounts. ICE determines approved delivery points at licensed warehouses in the United States and Europe for the Arabica futures contract. Each ICE coffee futures contract represents 37,500 pounds of coffee, around 250 bags of the beans. Robusta futures trade in London on the Euronext LIFFE Exchange. Each Robusta contract represents 10 metric tons or approximately 145 bags. A number of other international futures exchanges trade coffee futures including; the Tokyo Grain Exchange (TGE), the Singapore Commodity Exchange and the BM&F in Brazil.

Global demand for coffee has been growing with increasing population and changing taste buds in Asia. Coffee supply is highly dependent on seasonality and growing conditions in producing nations. Therefore, the price of coffee tends to be highly volatile attracting traders, investors and speculators who seek to take advantage of the commodity's highly volatile price.

As an update, coffee prices fell along with most other raw material prices during the later part of 2015. As of September 8, 2015, coffee was trading at $1.21 per pound on the active month December ICE futures contract. Ample nearby supplies, a higher dollar and a generally bearish environment for commodities all weigh on the price of java beans in the fall of 2015. In August, a report by Rabobank said that the current year deficit in coffee stood at 6.9 million bags and if all goes well with next year's crop the deficit will be at 1.9 million bags. However, that is a leap of faith given the development of an El Nino weather pattern that could cause either too wet or too dry conditions in coffee producing nations around the world. Technical support for coffee is around the $1.00 per pound level. Resistance is far above the market at the October 2014 highs of $2.2550 per pound level. Coffee is an agricultural commodity and the price tends to be very volatile. At $1.21 per pound in September 2015, the downside appears to be limited and the upside could be explosive.