Commodity Fundamentals: How to Trade the Precious Metals, Energy, Grain, and Tropical Commodity Markets

CHAPTER 16

Coffee

OVERVIEW

The word coffee comes from Kaffa, the region in Ethiopia where coffee originated. From Ethiopia, coffee seedlings spread throughout Arabia and Turkey. It was not until 1683, however, that coffee made its way to Europe. Invading Turkish armies were stopped outside Vienna, leaving behind sacks of coffee beans. Coffee consumption quickly spread and not only became a staple of European diets but also played a central role in European trade and commerce.

The French first brought coffee to the Americas, planting trees in Martinique and Brazil, while the Jesuits are credited with bringing coffee to Columbia. Europeans also brought coffee with them to the American colonies, where coffee soon replaced tea as the most popular beverage. Today, over 500 billion cups of coffee are served worldwide every year, and U.S. coffee drinkers alone consume three and one-half cups per day.

Coffee beans grow on a tropical evergreen shrub that can grow up to 100 feet tall. The tree grows best in tropical areas between the Tropics of Cancer and Capricorn. It requires year-round warm temperatures averaging about 70 degrees Fahrenheit and abundant rainfall.

A new coffee tree takes from three to five years to yield a pound of coffee. If the tree survives disease, insects, drought, flooding, earthquakes, and frost, it can have a lifespan of 20 to 25 years. Each year a typical fully groomed tree will yield enough beans (about 4,000 beans) to fill a onepound can of ground coffee on ...