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Coffee is considered one of the most favourable drinks across the world. It is a brewed drink that is made from roasted coffee beans, that come from the berry’s seeds in the coffea plant. In the last few years’ plentiful supplies of coffee from the world’s largest Arabica producers led to bearish trends in the markets and the lowering prices have created unsustainability. Coffee as a commodity remains one of the lowest values produce since November 2016. Brazil is one of the key producers of the beverage but its currency ‘real’ was under pressure since 2017. Weak currency exchanges and bottoming pricing cycles have made the commodity unsustainable.
Coffee is native to the tropical Africa and Madagascar, but can also be found in Mauritius and India. By 1986, it was grown in the equatorial regions of America and Asia. The plant was exported from Africa to 70 other countries. It has two varieties - the Arabica and the slightly stronger Robusta. It is a popular drink found in many different forms like espresso, iced, latte and is considered beneficial for health.
There are 3 ways to invest in the commodity- ETFs, Futures and Stocks. ETFs, give investors an opportunity to gain exposure in future price. European investors have more ETF options when it comes to coffee exposure. The futures, despite being designed to help producers hedge against cost volatility, has a well-developed liquid market. Investors looking to add it to their portfolios can buy contracts that offer to speculate on price fluctuations in a short-term. Buying stocks is more difficult and challenging considering how the industry works. Most of the production comes from small privately owned entities but investors can buy stocks of leading beverage houses like Starbucks, Luckin or other international supplier chains.
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