over 2 years ago • 1 min
After mismatched supply and demand caused recent surges in the price of used cars and lumber, it's now coffee’s turn to spike.
The wholesale price of premium arabica coffee beans (charted above) climbed to $1.95 a pound on Thursday, the highest since 2014. Robusta beans, which are used more in instant coffee, hit a three-year high.
While inflation hawks will no doubt seize upon these numbers as a further signal that governments’ pandemic-relief spending is fueling runaway price increases, others will point to more specific factors affecting the coffee market. After all, coffee harvests in Brazil, the world’s biggest producer, have been hit by a combination of drought and frost – crimping supply.
Either way, don’t be too surprised if the price of your daily caffeine fix climbs in coming weeks.
And if you want to bet on this rally in coffee continuing, there are exchange-traded products – like WisdomTree’s Coffee ETC – that are often easier for small investors to access than the futures contracts pros use. Just bear in mind that the ETC will, over time, lag a little behind the headline price of coffee, due to the cost of rolling over the underlying futures contracts.
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