Coffee (COFFEE/USD)
Coffee (COFFEE/USD) is one of the most actively traded soft commodities on the planet. While it may seem like a consumer staple, coffee’s price tells a much bigger story — one shaped by weather, supply chains, and speculation. In this tutorial, you’ll learn how coffee trades, what makes it move, and how to approach it with confidence and structure.
What Is Coffee (COFFEE/USD)?
Coffee is a globally consumed commodity, traded mainly in futures markets and priced in US dollars. The two primary types — Arabica and Robusta — are grown in tropical climates, primarily in countries like Brazil, Colombia, and Vietnam. Because it’s a soft commodity, coffee’s price action reflects crop cycles, weather disruptions, and international trade more than pure economic indicators. Most retail traders engage through CFDs that track Arabica contracts.
Why Coffee Moves
Coffee is especially sensitive to factors that other commodities often ignore. It reacts strongly to agricultural disruptions, but also to speculation and inventory levels. Here’s what moves the market:
Weather shocks
Frosts in Brazil, droughts in Vietnam, or hurricanes in Central America trigger immediate price spikes
Crop reports
Global production estimates and stockpile data from ICO and USDA move price decisively
Logistical issues
Port delays, shipping bottlenecks, or labor strikes affect supply flow
Currency movements
The Brazilian real (BRL) impacts coffee pricing — a weaker BRL often leads to lower coffee prices due to increased supply
Global demand
Rising consumption in emerging markets increases baseline demand
Speculation
Fund flows and position unwinding cause sharp reversals without warning
Coffee, unlike metals or energy, often reacts to agricultural panic and sentiment. One headline about frost can launch a multi-day rally, even without confirmed damage.
How to Trade Coffee (COFFEE/USD)
Trading coffee requires patience, awareness of seasonality, and the discipline to wait for confirmation. The volatility is real, but the setups come in waves — not constantly.
- Swing traders track weather trends, crop reports, and seasonal cycles
- Breakout traders look for aggressive candles and volume near key levels during news
- Reversal traders capitalize on overbought conditions and sentiment exhaustion
To trade coffee smart:
- Watch historical weather reaction levels on 4H and Daily charts
- Align technical setups with Brazil weather models or ICO projections
- Use COT reports to track fund positioning and crowd sentiment
- Combine Fibonacci tools with price action for safer pullback entries
Key Characteristics
Volatility
High — sharp moves on thin headlines are common
Liquidity
Decent, but thinner than energy or metals — spikes widen spreads
Correlations
Linked to BRL, soft commodity baskets, and sometimes sugar
Session Behavior
Moves strongest during US and London overlap when news hits
Best Use Case
Weather-based swing trades, breakout setups on agricultural reports
Example Trading Scenario
Let’s say frost warnings hit Brazil’s main growing region, and temperatures are expected to dip dangerously low. Coffee breaks a previous resistance zone on strong bullish momentum.
You see an engulfing candle on the Daily followed by a clean retest. You enter long with volume confirmation.
- Entry: Buy at 180.60
- Stop Loss: 175.90
- Take Profit: 192.80
- Risk-Reward: 1:2.35
These moves often run quickly and can gap — so being early with confirmation is key.
Summary Checklist
- Asset Type: Commodity
- Symbol: COFFEE/USD
- Volatility: High
- Correlated With: BRL, softs basket, weather patterns
- Best For: Swing traders, weather plays, momentum breakouts
Frequently Asked Questions
What affects Coffee prices the most?
When is the best time to trade Coffee?
Can Coffee be traded intraday?
It can, but swing trading is more effective due to inconsistent intraday volume and sudden spread spikes.
How does Coffee compare to other agricultural commodities?
What is the average daily pip movement of Coffee (COFFEE/USD)?
Coffee typically moves between 700 to 1,300 pips per day, with spikes well above 2,000 on major headlines.