Meanwhile, Indonesia, another robusta coffee grower, is expected to up its production as much as 3% to 10 million bags this year, an international coffee organization statistics noted.
Robusta prices have touched USD 1,910 per tonne on NYSE Liffe on October 21, which is the highest level since October 14, 2008. The prices have so far gained 34% over the past year.
While, Robusta prices are scoring peak, Arabica has touched highest level in past 13 years. On the ICCE futures Arabica prices touched USD 2.035 per pound on October 21.
Arabica production in Brazil has been hit with a severe drought situation and the output is expected to fall to the lowest level in four years in 2011.
Coffee has a long and unique story to tell. Ever since the spike in future prices hitting $3.50 way back in 1997, the supply has risen by leaps and bounds. The supply of coffee has increased primarily driven by the strong demand worldwide. And in the last few years, the increase in worldwide consumption has far exceeded the rate of production, forcing many coffee producing nations to sell this copious commodity in gradually increasing prices. Slowly but steadily, the reserves in the hands of producers, has dwindled to its lowest levels in 30 years, and has reached it?s lowest stock relative to worldwide consumption levels of today.
Coffee is a seasonality commodity. When it comes to trading seasonality commodities, many investors tend to overlook this one single fact, and this can result in devastating losses to the investor. However, if this seasonality factor is taken into account and observed religiously, massive gains can be achieved. Seasonality of the coffee commodity dictates the rise and fall of future prices at a particular time or a year, every other year, or in a defined cycle of years. As we know, every other year, coffee producing nations turns out massive crops, straining the coffee trees, and thus they will go through a smaller production season the following year, resulting in large oscillating prices in the traded futures. Last year was a surplus year, adding to the stock surplus, and thus this year, will be a deficit year, to the tune of 10 million bags. This is a significant deficit. And this comes at a time of ever increasing demand.
Since many other more popular commodities has their reasons to collapse due to rapid decline in demand worldwide, compounded by the economic problems we are now facing, coffee has been benefiting from the increased in home consumption worldwide. Demand has not slowed down in any way, and in fact, looks to have increased over the last several months. Coffee is and always has been in high demand, and there simply isn?t enough of it. The market for this commodity technically shows a clear sign of a bottom in place, and the start of a new upward trend.
Posting Komentar