Trading Concept
  • Home
  • Trading News
  • Email Whitelisting
  • Privacy Policy
  • Home
  • Trading News
  • Email Whitelisting
  • Privacy Policy
No Result
View All Result
Trading Concept
No Result
View All Result
Home Trading News

Coffee prices are at 10-year highs, and analysts say they have further to go

by
December 1, 2021
in Trading News
0
0
SHARES
0
VIEWS
Share on FacebookShare on Twitter

RELATED POSTS

The stock-market rally survived a confusing week. Here’s what comes next.

Nvidia and 5 Other Stocks at High Risk for Short Selling

Yating Kuo | iStock | Getty Images

Coffee prices have reached a 10-year high, and analysts expect tightness in the market to continue all the way into 2023.

Coffee contracts for December delivery ended Monday’s trading session at $2.34 per pound. On Thursday, coffee futures on New York’s Intercontinental Exchange reached $2.46, marking the highest price since 2011, when the commodity broke above $3 per pound.

Meanwhile, the International Coffee Association’s benchmark price was $2.07 per pound on Friday, up 85% from a year earlier.

Ole Hansen, head of commodity strategy at Saxo Bank, told CNBC that over the past 12 months, “a perfect storm of events [has been] conspiring to give our beloved bean a boost.”

“The question for future price action is how much of these developments are potentially longer-lasting,” he said in a phone call. “I think we need to focus on what’s been unfolding in Brazil this year, where we’ve had a generational low in temperatures, a very quick spell of frost which hit some of the growing areas, and we’ve had a period of drought – this has left the 2022 crop in a bit of a precarious state.”

Loading chart…

Hansen added that these adverse weather events would affect the yield later this year, as well as in 2022 and potentially even 2023.

“We saw coffee rally to about $3 per pound back in 2011, when we had another Brazil scare,” he said. “These are really the kind of numbers that prompt the market to speculate whether we can reach those levels once again, and I think with Brazil in mind, and if the projections over the coming months continue to confirm a slowdown or reduction in output, then the risk of our brew getting more expensive is very real.”

Alongside bad weather, global supply constraints have had a substantial impact on the coffee market because producers and roasters — the companies that refine coffee into the product we drink — are often located in different countries. Market uncertainty is also stemming from exporting countries such as Ethiopia, which is on the brink of a civil war, and Vietnam, which is seeing a rise in Covid-19 cases that could hit production.

“I think on balance we have a market which is, for the first time in years, starting to show some tightness,” Hansen added.

Maximillian Copestake, executive director of European coffee sales at Marex, said that coffee was engaged in “a huge price race that is predominantly driven by freight dislocations.”

“For the last five to eight years, we’ve had supply [concentrated in] one or two big coffee-producing origins, one of them being Brazil, one of them being Vietnam,” he told CNBC via telephone.

“If you have damage in one or two of those countries, which we have had, all of a sudden the market goes crazy to try and encourage other countries to produce coffee. That is the underlying principle, and then the cherry on the top has really been the freight disruptions. So, what was already a tight balance sheet, which should have traded out in the prices rallying potentially later on in the crop, have been accentuated by these freight disruptions we’ve seen.”

Copestake noted that it takes around two years for coffee production to respond to a change in price.

“I don’t think we’re by any means out of the woods yet,” he told CNBC. “But when the price rallies, you drag every bag of coffee available in every farmer’s warehouse out to the market to commercialize, because the prices are excellent. So there is incentivization to plant more, but also to minimize stocks at origin and bring those stocks to destination. I think we’re probably in the course of doing that.”

He added that he expects prices to remain high and volatile looking ahead.

ShareTweetPin

Related Posts

The stock-market rally survived a confusing week. Here’s what comes next.

by
February 4, 2023
0

Despite a Friday stumble, stocks ended a turbulent week with another round of solid gains, keeping 2023’s young but robust...

Nvidia and 5 Other Stocks at High Risk for Short Selling

by
February 4, 2023
0

Nvidia and 5 Other Stocks at High Risk for Short Selling | Barron's Stocks have rallied in recent months, with...

Stock Market Rally Signals It’s No Bear Run; Tesla CEO Elon Musk Not Liable For ‘Funding Secured’ Tweets

by
February 4, 2023
0

Post Content

Some Medicare beneficiaries are surprised with premium surcharges, which can triple premiums. Here’s how to appeal and avoid them

by
February 4, 2023
0

S&P 500 4,136.48 -43.28(-1.04%)   Dow 30 33,926.01 -127.93(-0.38%)   Nasdaq 12,006.96 -193.86(-1.59%)   Russell 2000 1,985.53 -15.69(-0.78%)   Crude...

COVID Feb 3, 2023: Update on Cases, Hospitalizations and Deaths

by
February 4, 2023
0

by Calculated Risk on 2/03/2023 09:24:00 PM Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios. On...

Next Post

Is a Stock Market Correction Coming? Here’s a Big Red Flag.

Asia-Pacific stocks bounce as investors assess omicron Covid variant concerns; oil prices jump

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

email

Get the daily email about stock.

Please Enter Your Email Address:



By opting in you agree to our Privacy Policy. You also agree to receive emails from us and our affiliates. Remember that you can opt-out any time, we hate spam too!

MOST VIEWED

  • WHO says Covid vaccine booster programs will prolong pandemic

    0 shares
    Share 0 Tweet 0
  • Forget Tesla — this auto stock is the one to buy right now, analyst says

    0 shares
    Share 0 Tweet 0
  • Spin or Split? AT&T Has a Big Decision to Make on Discovery Stake.

    0 shares
    Share 0 Tweet 0
  • Here’s how Carl Icahn is positioning for a possible recession in America

    0 shares
    Share 0 Tweet 0
  • Some lawmakers and their families are betting thousands of dollars on crypto

    0 shares
    Share 0 Tweet 0
  • Home
  • Trading News
  • Email Whitelisting
  • Privacy Policy
All rights reserved by tradingconcept.net
No Result
View All Result
  • Email Whitelisting
  • Home
  • Privacy Policy

All rights reserved by www.tradingconcept.net