The famous commodity trader, Jim Rogers, is apt to say, "Trade what you know." Every day hundreds of millions of people drink their morning coffee, be it at Starbucks, Dunkin Donuts, at home or brewed over a fire in some exotic location. Far more traders drink coffee than trade it.

Here's a brief overview about coffee trading and how you can potentially profit from the most popular drink in the world.

Coffee was first used in the 9th century after being discovered in Ethiopia, it is now the top agricultural export for over 10 countries. Brazil and Vietnam lead the list for coffee exporting countries.

There are many different varieties of Coffee; I'll focus on the Arabica type. Arabica coffee is traded on the International Futures Exchange or ICE and is known as Coffee Futures, or "C", on the exchange. Its ticker symbol is KC and it trades in a contract size of 37500 pounds. The contracts are listed in the months of March, May, July, September, and December and are settled via physical delivery.

There are no price limits imposed by the exchange and the tick size is 5/100 cent per pound or $18.75/contract. The fees imposed for non-exchange members trading electronically are $1.75/contract per side. Now that we have the basic facts of the Coffee contract covered, just what is happening currently in this market?

The Current Picture

Brazil is the World's largest exporter of coffee. Exports from Brazil fell 22% in May from the month before due to currency concerns.

The theory is that the rising Brazilian Real combined with the falling U.S. Dollar has Brazilian producers waiting for a lower Real price to export/sell. Coffee supplies have dropped 2.3% this year in ICE monitored European and U.S. warehouses. A larger harvest is predicted per the US Department of Agriculture, counteracting current supply concerns keeping prices relatively unchanged on the year.

However, concerns about rain and cold weather disturbing the harvest appears to have caused the up move in the first week of June. As you can see from the chart, coffee had a major up move in the start of the year, climbing from 140 to nearly 170; it has since dropped back and appears to be consolidating in the 135 to 140 area presently.

Bulls would call this technical formation a potential base for another run at the highs. Coffee bears would say this is just a pause in the down trend that will continue soon. Whether you're a coffee bull or bear, this commodity is definitely worth critical consideration right now.

Good Luck!

Dave Goodboy is Vice President of Marketing for a New York City based multi-strategy fund.