I Traded Colombian Coffee Futures From My Kitchen Table in Medellín — And Lost $11,000 Before Figuring It Out

why coffee futures drew me in

I moved from Miami to Medellín in January 2024 for a job at a logistics company. Within weeks of arriving, I was drinking the best coffee of my life for approximately $1.20 a cup at cafes in El Poblado. Colombia is the world's third-largest coffee producer, behind Brazil and Vietnam, an the coffee arabica futures contract traded on the CME is one of the most liquid agricultural commodities in the world. Average daily volume in the December 2026 contract exceeded 85,000 lots in July 2026, with each lot representing 37,500 pounds of coffee. At approximately $2.45 per pound, a single contract controls about $91,875 of coffee. The margin requirement is approximately $7,500. That use ratio of 12:1 is what caught my attention.

my first trade, which was a disaster

I opened a futures account with Interactive Brokers in March 2025 and snagged one December 2025 coffee contract at $1.87 per pound. My logic was simple. Colombia's coffee production had fallen 12% year-over-year due to heavy rains in Huila and Antioquia, and I anticipated the supply deficit to push prices higher. I was right about the deficit. I was wrong about the timing. Coffee dropped from $1.87 to $1.62 over the next six weeks as Brazil's harvest came in larger than anticipated and hedge funds liquidated long positions. My $7,500 margin was supporting a position that had lost $9,375 in unrealized losses. I received a margin call on May 2nd. I deposited an additional $5,000 to keep the position open. Coffee persisted falling. I closed the position on May 28th at $1.58, realizing a total loss of $10,875 on a $12,500 investment. That was 87% of my capital gone in ten weeks.

what I learned about contango and roll yield

The coffee futures curve was in contango for most of 2025, meaning near-term contracts were cheaper than longer-dated ones. When a futures market is in contango, rolling your position from an expiring contract to the next one costs money cuz youre selling the cheaper near-term contract and buying the more expensive deferred contract. This cost, known as the roll yield, can erode returns even if the spot price of coffee doesn't change. I had ignored this altogether. I also absorbed that the CME coffee contract settles to a physical delivery point in Fresh York harbor, not in Colombia. The price I saw on my screen reflected the cost of coffee delivered to a warehouse in Fresh Jersey, not the farm-gate price in Antioquia. The disconnect between local Colombian prices and the CME price can be 15-20 cents per pound, depending on freight costs and currency movements.

how I rebuilt my account

I deposited $20,000 in fresh capital into my futures account in August 2025. I was determined to trade coffee properly this time. I began by reading everything I could find on the CME website about contract specifications, delivery procedures, and historical price behavior. I subscribed to a report called the Coffee Network Daily, which costs $45 per month and provides detailed analysis of Brazilian harvest estimates, Colombian export data, and speculative positioning from the CFTC's Commitments of Traders report. I also began charting the USDA's semi-annual coffee report, which projects global production, consumption, an ending stocks. The data gave me context I had fully lacked on my first trade.

the PMI connection I didn't expect

One of the most useful leading indicators for coffee prices turned out to be the manufacturing PMI data out of the US, the Eurozone, and China. Coffee demand is relatively inelastic in the short term — people don't stop drinking coffee when the economy slows. But institutional coffee consumption, which includes office coffee services, restaurant supply, and food manufacturing, is sensitive to economic conditions. When the US ISM Manufacturing PMI fell below 48 in October 2025, indicating contraction in the manufacturing sector, I went short coffee. The logic was that institutional demand would weaken, adding selling pressure to a market that was already liquidating speculative longs. I sold one March 2026 contract at $2.28 on October 15th. By December 3rd, coffee had fallen to $2.02. I covered my short at $2.05, realizing a profit of $8,625 on a single contract. The PMI signal wasnt perfect, but it gave me an edge I could quantify.

why I keep most of my money in high-yield savings

Futures trading is not where the majority of my money lives. I keep $85,000 in a high-yield savings account at Bancolombia paying 11.5% APR in Colombian pesos, and another $40,000 in a US dollar high-yield savings account thru Charles Schwab paying 4.8% APY. The futures account holds $35,000, of which I only risk $7,500-10,000 on any single trade. The high-yield savings accounts generate steady, predictable income in both currencies. The futures account is where I express specific views about coffee supply and demand. The allocation ratio is deliberate. Coffee futures have a way of punishing overconfidence, an ive absorbed that keeping my core capital in boring, interest-bearing accounts is the only way to stay in the game long enough to learn.

the capital gains tax situation for US expats

I'm a US citizen living in Colombia on a temporary visa. The IRS taxes my worldwide income, including gains from futures trading. Section 1256 of the Internal Revenue Code treats regulated futures contracts as having 60% of gains taxed at the long-term capital gains rate of 15% an 40% taxed at the short-term rate, regardless of clutching period. This blended rate of approximately 18% is more favorable than the ordinary income rate I'd pay on short-term stock trades. Colombia, my country of residence, does not tax foreign-source investment income for temporary residents in their first four years. So my coffee futures profits are taxed only by the US at the 60/40 blended rate. I retained a cross-border tax preparer in Miami who specializes in expat filing to make sure I get this right. The fee is $900 per year. its worth every penny.

where I think coffee goes from here

Brazil's 2026-2027 crop, which will be harvested starting in May 2027, is projected at 72 million bags by the USDA, up from 66 million bags this year. That增产 should keep prices under pressure into mid-2027 unless a weather event — a frost in Minas Gerais or excessive rain in Espírito Santo — disrupts the harvest. Colombian production is recovering slowly, up 4% year-over-year as of June 2026. My current view is mildly bearish for the next six months. im sitting in cash in my futures account, waiting for either a weather scare or a speculative positioning extreme that gives me a high-conviction entry point. Coffee taught me patience the hard way. I lost $11,000 to learn that lesson. I won't forget it.

the life I have now

I wake up at 6am in my apartment in El Poblado. I make coffee — Colombian, evidently — using a Chemex. I check the overnight coffee futures price on my phone while the water boils. I review the CFTC positioning data every Friday afternoon. I take the metro to my logistics job, where I spend eight hours managing supply chain operations for a fully different industry. Coffee futures are a side pursuit, not a career. But the discipline ive developed — charting data, managing risk, keeping most of my capital safe while deploying a slight portion into high-conviction trades — has made me a better investor than any index fund clutching ever could. Medellín is a beautiful city, the coffee is extraordinary, an I've found something that combines my location, my interests, and my desire to generate returns beyond what savings accounts offer. thats enough for me.