The Definitive Guide to Coffee Futures
Despite the rise in popularity of soda and energy drinks, the world still gets the majority of its morning caffeine fix via coffee. That fact along with steadily rising global demand makes coffee one of the more interesting investments for traders and investors alike. And like much of the commodities complex, coffee is readily available as a traded futures contract [for more free commodity news and analysis subscribe to our free newsletter].
Coffee Futures Buoy Commodity Indexes in 2014
For the last few years, commodities have dragged behind surging equities, as it seemed that the commodity supercycle was beginning to cool off. 2014, however, has seen broad commodity indexes outpace equities. Beating gains of just over 2% in a little over four months isn’t anything to write home about, but hard assets are holding their own nonetheless. However, most commodity indexes are benefiting from one hard asset in particular, coffee [for more commodity news and analysis subscribe for our free newsletter].
Why Coffee Futures are up 80% in 2014
After commodities had a rough go in 2013, taking the backseat to surging equities, it seems that this year has more favorable conditions in store for a number of hard assets. Though a number of commodities have gotten off to a white-hot start this year, none have even come close to the gains that coffee futures have notched, as that commodity has spiked more than 80% through the first 10 weeks of the year [for more commodity news and analysis subscribe to our free newsletter].
Brazil’s Dry Spell Affects Coffee and Sugar Prices
In the commodity space, Brazil is one of the major players in global agricultural production. Roughly 20% of the Brazilian workforce is engaged in agriculture, and more than a quarter of the country’s export earnings come from agricultural exports. Because of its dominance in the market, however, any shift in local crop conditions and climate can have significant impact on agricultural prices [for more agriculture news and analysis subscribe to our free newsletter].
Checking in on the Worst Commodities of 2012
2013 was undoubtedly a rough year for commodities, particularly for precious metals like gold and silver. There were, however, some bright spots in the space, including cocoa, soybean meal, orange juice, gasoline, and brent. For the coming year, analysts remain rather pessimistic on the broad commodity market. Goldman Sachs analysts have noted: “Last year, we pointed to the ongoing shift in our commodity views, ultimately towards downside price risk. The impact of supply responses to the period of extraordinary price pressure continues to flow through the system.” [For more commodity news and analysis subscribe to our free newsletter].
