The international trade of coffee has a very rich history. In London, bags of coffee were auctioned by candlelight. When the light ended, so did the auction. In the New World, itinerant coffee merchants roamed the streets of the city, taking bids and selling to the highest bidder.

As transportation and communications evolved, so did trade. Faster ships and more reliable information regarding shipping schedules and crop conditions helped to regulate prices.

In the 19th century, coffee growers often became more concerned with the price their coffee would sell for, rather than in the quality of the product. In addition, unpredictable climates interfered with consistent supply.

In reaction to this problem, coffee exporters and importers began to use future delivery contracts. To protect against future price changes or shortages, merchants paid in advance of delivery on the floor of the New York Coffee and Sugar Exchange, in similar exchanges in London and other European cities, and in producing countries. The major producing countries belong to the International Coffee Organization (ICO), which works to stabilize prices for producers and increase coffee consumption. Yet despite these best efforts, supply cannot always meet demand.

The loss of price controls, the erosion of Brazilian surpluses, plus drought, floods and other natural disasters, created wide price fluctuations. This led to yet another time-honored tradition, hedging. For example, a green coffee importer buys a shipment in July for delivery in August. Believing prices will fall, he sells the same amount for September delivery (a futures contract) on the New York Coffee and Sugar Exchange. He agrees to accept delivery at today's price and deliver at the same price. Therefore, regardless of fluctuation in the market, he's covered. If prices go down, the value of his coffee from the shipper drops, but his contract with the Exchange increases. If the price of coffee increases, the reverse occurs.