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Investment idea: Coffee

26 Apr 2017 | 2 min read

Coffee is among the most favorite beverages of the world. Global demand is increasing not least because the global population is rising. Moreover, Coffee is one of the most traded commodities.

When talking about Coffee, one has to distinguish between the different sorts: Arabica and Robusta. Robusta is grown exclusively in the Eastern Hemisphere, primarily in Africa and Indonesia, whereas Arabica is dominantly grown in Latin America. Currently, Brazil is the largest and most efficient producer of Arabica Coffee beans. Last year, Brazil produced a record coffee crop of 51.37 million bags, and trees usually produce less after a big harvest.

Latest news indicate that Coffee will face a sharp fall in inventories. Most observers forecast a decrease in Arabica-production in Brazil for 2017/18. According to Rabobank, Brazilian production of Arabica beans is forecasted to fall around 13 per cent in 2017-18. Further on, available inventory of consumption will decrease to an eight-year low. This supply shortage could lead a deficit for the world’s Coffee market and thus, potentially increase Coffee prices.

Currently, the market for Arabica is trading at around USD 1.30 a pound (26th April 2017). However, investors should always consider the risk of their investments. Developments could turn out differently than expected by investors.

This information does not constitute a financial analysis, but product advertisement. Thus it does not meet the legal requirements to ensure the impartiality of financial analysis and is not subject to trade prohibition before the publication of a financial analysis.

For detailed information, particularly regarding the structure and the risks associated with an investment in the derivative financial instruments, prospective investors should read the Base Prospectus, which is available together with the Final Terms and any supplement to the Base Prospectus in electronic form on the issuer’s website: http://certificates.vontobel.com. Additionally, the Base Prospectus, any supplements to the Base Prospectus and the Final Terms are available in printed form, free of charge, at the registered office of the issuer: Vontobel Financial Products GmbH, Bockenheimer Landstrasse 24, 60323 Frankfurt am Main, Germany.

Investors should consider the applicable selling restrictions.

Companies of the Vontobel group may directly or indirectly pay commissions in varying amounts to third parties (e.g. brokers) in connection with the public offer and the distribution of the derivative financial instruments. Further information is available upon request from your distribution partner.

Without permission, this product advertisement may not be reproduced or redistributed.

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