Commodity Coffee

After the coffee crisis of 1989, commodity coffee prices became a kind of financial product, leading to price instability. Furthermore, under the Doi Moi policy implemented in 1986, the emerging Robusta coffee producer Vietnam rapidly increased its supply through national policy, threatening even Brazil, the leading coffee-producing country. This led to a decline in export prices from Latin America and Africa.
When prices fell, farmers in coffee-producing countries were unable to sell their coffee, even if they lowered the price, and their incomes fell.

The price of commodity coffee is set on the New York Mercantile Exchange for Arabica and on the London Mercantile Exchange for Robusta.
The standard price for Arabica is cents per pound (about 453g), and for Robusta it is dollars per ton (1,000kg).
In reality, coffee importers and producer-exporters often make contracts to purchase a certain amount of coffee of a specific quality over a specific period, such as the next three years.
This is called a forward contract.

Major convenience store chains' huge distribution networks for coffee are supported by procurement from trading companies, but these primarily consist of commodity coffee.
Not only in convenience stores, but also in the regular coffee, instant coffee, and canned coffee sold in supermarkets, as well as much of the coffee served in cafes and coffee shops, all are commodity coffee.
Currently, the price of commodity coffee is determined by the New York Mercantile Exchange and, for some Robusta varieties, the London Mercantile Exchange.