Americans will pay more for Starbucks coffee next week; the price of a cup is rising by nine cents, after a five cents hike last October. The weak dollar, used in sales to foreign buyers from Brazil – the world’s largest market for coffee beans – has persuaded sellers to hold out for better deals. Prices have also been driven by fears that frost would damage the crop, although these have eased on forecasts of warm weather.
But coffee has yet to share the gains enjoyed by other commodities, with prices hovering between $1 and $1.20 per pound over the past two years. This is set to end, says Rohit Chawdhry in the Evening Standard; inventories have fallen 50% since the late 1980s, while Asia’s middle classes are developing caffeine habits. It would be reasonable to expect “a likely gain of 30%” in the next six to 12 months. As well as buying a coffee ETF (exchange traded fund), Chawdhry suggests a coffee plantation firm, such as Asia’s Tata Coffee (TATCO).
For more recent articles on investing in soft commodities, read Where to make a fortune in soft commodities and Seven ways to go soft on commodities