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.
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