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Monday, Mar. 2, 2015

Supply Jitters Send Coffee Higher

Posted Friday, September 2, 2011, at 3:22 PM

Your morning cup of coffee may set you back a little more in the future, as prices for unroasted beans have risen more than 50 cents per pound (+21%) over the last three weeks.

Coffee futures prices rose for 18 straight trading sessions, nearing a 4-month high on Thursday at $2.90 per pound. Prices have perked up amid low coffee exports and fear among companies that they may not be able to get the beans they need to fulfill orders.

There is currently a shortage of high-quality Arabica coffee beans, and some analysts warn that Colombia's upcoming harvest may fall short of refilling global stockpiles. Colombia is the world's third largest producer of coffee, surpassed only by Brazil and Vietnam. There is some hope that Vietnam's harvest could offset low production from Colombia, but most Vietnamese beans are of the low-quality Robusta variety, typically relegated to making instant coffee.

As of Friday morning, coffee for December delivery was trading at $2.89 per pound.

Silver Shines Again

Silver ran to a two-week high on Friday morning, reaching $43.24 per ounce. Global investors fled to the perceived safety of precious metals after disappointing jobs data caused them to dump stocks on Thursday and Friday.

Silver is often belittled as "poor man's gold", as gold is worth 43 times more than silver, but investors have been giving silver increasing attention in recent years. The global supply of silver is actually less than that of gold, and silver has more industrial applications, as it is a better conductor of heat and electricity, a better reflector of light, and it even has medical uses.

Over the last ten days, silver has climbed $4.43 / oz (+11%), while gold gained $180/oz (+10%), trading Friday near $1880 per ounce.

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Commodity Futures File
Alex Breitinger
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Alex Breitinger, a 2009 graduate of DePauw University, is a commodity futures broker with Breitinger & Sons, LLC in Valparaiso. He can be reached at 800-411-FUTURES (3888) or online at www.indianafutures.com.
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