Arabica coffee beans are the soft commodity to watch in 2011 because of setbacks in production as demand rises, according to Rabobank as cited by agrimoney.com.
While its prices struck 13-year highs, the coffee beans were impacted by inclement weather in numerous countries and a strengthening demand coming from China, where drinking coffee is very rapidly catching on.
"In the last three low-cycle years, the global deficit for all coffee averaged 5.4 million bags," according to Rabobank, which underscored the likelihood of a shortfall in production for 2011.
While La Niña has damaged Central American coffee plantations, Arabica crops in Colombia – recognized as the second-largest producer of the bean – have been disappointing. Coffee consumption has skyrocketed 40 percent in China during the past two years as the country develops a taste for the hot beverage.
Prices for Arabica beans will continue trumping robusta beans, which are cheaper. Vietnam grows the globe's biggest supply of robusta.
"Roasters and end users continue to mix as much of the lower-value robusta in blends as possible, but added demand growth potential here is limited as roasters do not want the final product taste altered noticeably," according to Rabobank.
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.
