How the International Coffee Price Is Quoted on the New York and London Stock Exchanges

Coffee, one of the most traded commodities in the world, holds a crucial place in the global economy. Its international price is determined mainly in two exchanges: New York and London. Through these platforms, the value of the most traded coffee varieties, such as arabica and robusta, is set.

Quotation in New York: arabica coffee.

The New York market is the main benchmark for arabica coffee, known for its high quality and refined flavor. In this market, the price is determined through futures contracts, which are agreements to buy or sell a specific quantity of coffee at a future date at a pre-set price. These contracts let producers and buyers manage risks related to price volatility.

Factors that influence the price include:

1. Weather conditions: Frosts and droughts in key producing regions such as Brazil can reduce supply, pushing prices up.
2. Global production and demand: The amount of coffee produced and consumed globally directly affects the price.
3. Speculation: Investors in the futures markets also play an important role by influencing price fluctuations.

The price of arabica coffee is quoted in US cents per pound, and transactions are carried out under strict quality standards.

Quotation in London: robusta coffee

On the other hand, the London market sets the price of robusta coffee, known for its higher caffeine content and lower acidity. This market also uses futures and options contracts to set prices, but unlike arabica, robusta is popular for the production of instant coffee and commercial blends.

The price of robusta is expressed in dollars per metric ton. The factors that influence its price are similar to those of arabica, although they also include specific aspects such as the policies of the main producing countries, including Vietnam, Indonesia, and Brazil.

Interaction between the markets

Although these two markets operate independently, they are closely linked by the global economy. Changes in the supply and demand of one variety can affect the prices of the other, and investors often trade in both markets to diversify risk.

Macroeconomic factors and their impact

The international price of coffee is also influenced by factors such as:

• Exchange rate: The strength of the US dollar can make coffee more or less expensive for international buyers.
• Production costs: Increases in the prices of fertilizer, labor, and transportation affect producers' profitability and, in turn, international prices.
• Consumption trends: Changes in consumer preferences, such as the rise of specialty coffees, also influence price dynamics.

Conclusion

The pricing of coffee on the New York and London markets is a complex process influenced by a variety of economic, climatic, and speculative factors. Understanding these dynamics is essential not only for players in the coffee industry, but also for producing countries that depend on this commodity as a vital source of income.