The Strategist

Coffee futures skyrocket as market concerns grow


12/17/2019 - 09:48



Market concerns are growing due to reports of poor harvests in Brazil and other South and Latin American countries.



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There is turmoil in the coffee market: amid reports of poor crops in Brazil and other countries in South and Latin America, coffee futures soared 7.56% in a day to $ 1.3895 a pound. There has been no such rapid growth since 2015. For the year, raw materials for the popular drink have already added 38%, and prices are at the level of a three-year maximum.

The International Coffee Organization (IOC) reported a sharp reduction in Brazilian raw materials in its warehouses: a total of 975 60 kg bags out of a total of 2 million.

According to the organization’s forecasts, next year the demand for coffee will exceed the supply by more than 500 thousand bags.

Producers attribute the deficit to the fact that there were too few rains this season, which caused a crop failure. “This year we have a shortage. Brazil, the largest producer, makes less coffee. Brazil has a semi-annual crop cycle, so there is always a successful year and a failure. The year before we had a record crop,” Comexim USA Trade Director Rodrigo Costa commented on CNBC, noting that people have relaxed too much that year.

At the same time, as Jeff Kilburg, CEO of KKM Financial, told CNBC, there are concerns that some manufacturers who have already sold their coffee in futures will not be able to deliver the product. And this intensifies the panic in the market.

source: cnbc.com




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