The iPath Series B Bloomberg Coffee Subindex Total Return ETN (NYSEArca: JO) could be another example of a commodities exchange traded product that has to face a test stemming from the COVID-19 pandemic.
That after JO and coffee prices have endured some punishment over the past several months. The selling pressure was so severe that the wholesale price of arabica coffee beans even dropped below $1 U.S. a pound on the New York ICE exchange at the start of February, or a more than 30% plunge from where it was at the end of December, CBC reported.
“The spread of the disease is scrambling supply chains in everything from crude oil to copper and foodstuffs, with many countries reporting a shortage of containers,” reports Bloomberg.
Coffee is one of the most volatile commodities and JO reflected as much in 2019 with plenty of supporting evidence in recent weeks.
Jumping For JO
Due to uncertainty about weather and supply deficits or surpluses, there are dueling views of what 2020 will bring for coffee prices.
“Coffee futures jumped as much as 11% in New York on Wednesday after reports that stevedores in Brazil would go on strike indefinitely. Prices later pared as the action was averted,” according to Bloomberg.
However, some producers are preparing buyers for supply chain disruptions stemming from the coronavirus outbreak. Brazil, the world’s largest coffee producer, has more than 600 cases of respiratory illness and seven fatalities.
“Volcafe Ltd. told clients that logistical holdups are expected to become ‘more widespread’ throughout major producing countries, according to a memo sent to clients,” reports Bloomberg. “Sucafina SA encouraged buyers to place orders as soon as possible to ensure they receive their beans in time, the Swiss trader said in a separate memo.”
JO is up 3.34% this month and is higher by 4.37% over the past year, making it one of the better-performing commodities exchange traded products over that span.
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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.
