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Friday, October 5, 2007

Coffee Introduction

Coffe is flowering native to subtropical Africa and southern Asia. Seeds of this plant are the source of a stimulating beverage called coffee. The seeds are called "beans" in the trade. Coffee beans are widely cultivated in tropical countries in plantations for both local consumption and export to temperate countries. Coffee ranks as one of the world's major commodity crops and is the major export product of some countries. Coffee is one of the most valuable primary products in world trade, in many years second in value only to oil as a source of foreign exchange to developing countries. Its cultivation, processing, trading, transportation and marketing provide employment for millions of people worldwide. Coffee is a traded commodity on major futures and commodity exchanges, most importantly in London and New York.

There are two main species of Coffee that may be grown for the beans: Arabica Coffee is considered to have the best quality while Robusta Coffee is grown on land unsuitable for Arabica. Coffee is cultivated in Latin America, Southeast Asia, and Africa.

Robusta Coffee main trading centre is London while Arabica Coffee trading centres are New York and San Paulo. The futures market analysed in this blog is the NYBOT Arabica Coffee Futures.

A coffee tree can grow fruits after 3–5 years, for about 50–60 years.

Brazil is the largest coffee exporting nation, but in recent years Vietnam has become a major producer of Robusta. Robusta coffees, traded in London at much lower prices than New York's Arabica, are preferred by large industrial clients, such as multinational roasters and instant coffee producers, because of the lower cost.

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