Each of the three investment options available for this tangible commodity comes with risk, given you’re taking a bet as to how much coffee will sell for.
Exchange-traded funds (ETFs) are a type of investment made up of a collection of commodities, equities, bonds or currencies, allowing for diversification across an entire industry by tracking its overall success.
Commodity-based coffee ETFs operate with an arbitrage mechanism designed to allow investors to directly track the performance of the coffee market as a whole.
Only one ETF that is exclusively invested in coffee is currently available:
Another option for investing in the coffee industry is purchasing stock in a company that sells or is involved in the production of this commodity, though coffee growers and importers are much more fragmented than some other commodities. Investing in more than one company is a safer option than putting all your eggs in one basket. Another way to reduce your risk is by buying stock in a company that sells coffee in addition to other products. In the case of coffee, the industry leaders for coffee sales include ubiquitous brands like:
Shares of stock are a simple way to access the market, because you can purchase them through an online broker or financial adviser.
Futures are one of the most direct ways to trade a commodity, though they’re traded on different exchanges than stocks are, so you’ll need a brokerage account that supports futures trading and you’ll probably access a different part of your trading platform than you would with stocks or options. When you purchase a future, you buy a contract to purchase a commodity — in this case coffee — at a future date at a specified price. These contracts come with an expiration date.
Investing in coffee futures essentially means betting on what the coffee will sell for at a specific date and place. For instance, the Coffee C contract offers trades five times a year and covers bean deliveries from 19 countries. Each contract is for 37,000 pounds of coffee — not a small investment. Those who grow coffee beans or buy coffee beans can use futures to lock in prices, but futures can also be traded by investors and speculators.
Futures can be extremely volatile and are far riskier than other investment options. They also offer the greatest potential return if you get the timing and price movement right to see a profit on your investment.
To make comparing even easier we came up with the Finder Score. Trading costs, account fees and features across 10+ stock trading platforms and apps are all weighted and scaled to produce a score out of 10. The higher the score the better the platform - simple.
The price of coffee fluctuates depending on a range of factors, many of which are out of our control, resulting in a volatile and unpredictable commodity:
You can invest in coffee by purchasing coffee ETFs, stock in coffee companies or coffee futures. But the price of your daily bean can be unpredictable given growing and manufacturing variables.
Before purchasing this commodity, compare your investing options across trading platforms and other tangible goods.
How to choose the best paper trading platform to help you learn the ins and outs of investing.
Find out how the Trump tariffs will impact the stock market and explore Canadian stocks that may be resilient amidst tariffs.
Want to dive into investing but don’t have much to spend? Take a look at these types of stocks.
Enjoy perks like free trades and cash back when you open a stock trading account with these online broker promotions.
Use this self-directed trading app to learn the basics of investing with a streamlined app and a number of free trades annually.
These are the best renewable energy stocks to buy now in Canada.
Whether you’re a new or experienced investor, these are the best stock trading platforms and apps in Canada.
Make quick and easy trades using this reputable online trading platform from TD.
Here’s what you need to know about the benefits and shortcomings of this Big Bank investment platform.
Questrade is a leader among Canadian discount brokerages, but is it right for you? Compare fees, features and alternatives here.