Investment idea: Coffee
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.
Bull & Bear sertifikaatti
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