What’s Brewing in the World of Coffee?
Saxo Bank | Feb 14, 2012 09:10AM ET
The price difference between the two different qualities of coffee has narrowed dramatically during the last few weeks. While the price of high quality Arabica coffee has fallen more than six percent year to date Robusta coffee, the lower and more widely consumed quality, has rallied by 19 percent. The spread between the two, which has been averaging 3,435 dollars per metric tonne over the last year, has now narrowed to 2,650 dollars.
The rally and subsequent outperformance will undoubtedly run out of steam soon but not until short positions have been covered and food producers and trading houses manage to secure supplies. According to analysts this year's Vietnam crop is still expected to be a record and the feeling is that farmers there held back supplies in order to achieve higher prices, something that seems to have worked out spectacularly.
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