Anyone who counts on a cup of hot brewed coffee, an espresso or an icy Starbucks concoction to get them through the first dark hours of the day will be likely be paying a bit more for their caffeine fix. Arabica coffee futures just jumped to a 13-year high, and robusta beans weren't far behind.
Globally, the International Coffee Organization says that stocks of coffee beans are at extremely low levels, which increases futures market volatility. Commodity futures brokers and traders watching the coffee markets react more strongly to signs of supply disruption when there's a lack of reserves to fill in for shortfalls.
Coffee "C" futures for March 2011 delivery rose 1.636 percent to 201.65 cents per pound on the IntercontinentalExchange, after earlier touching the 204-cents-per-pound mark.
"Over the last six months a highly speculative green coffee market and dramatically increased commodity costs have completely altered the economic and financial picture of many players in the coffee industry," Howard Schultz, the outspoken chief executive officer of Starbucks, said last month.
The current price surge is being driven by supply concerns from South America, where Brazil's coffee trees are entering a lower-producing part of a biannual cycle and Colombia is fighting a corrosive "roya" fungus.
Risk Disclosure
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.
