It looks like coffee prices just got their caffeine fix. The coffee exchange traded note (ETN) is one of the few commodity-focused funds trading higher both short- and long-term. What’s behind the sudden awakening?
Coffee prices have certainly perked up the past few days. The July contract for coffee traded on the New York Merchantile Exchange has jumped 9.8% from last Monday through yesterday, says Matt Phillips for The Wall Street Journal.
So why is there a spike in coffee prices? The low supply of top-notch fine arabica coffee beans in Brazil – the world’s top producer – means that exporters forking over more money for the beans. There is also a scarce supply of java beans from Central America and Colombia, making Brazilian beans all the more attractive to large companies. [Coffee ETN Ready to Brew?]
New arabica coffees have been flowing into the market place for several weeks since the start of the harvest, but not as quickly as buyers would like, and the demand for coffee both new and old is bold. [Why the Coffee ETN is Waking Up.]
The iPath Dow Jones AIG Coffee TR Sub-Index ETN (NYSEArca: JO) is mirroring the rising prices, up 11.2% in the last month.
For more stories about coffee, visit our coffee category.
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.