Market Insight
5234 views November 6, 2021 posted by Maja Wallengren

MARKET INSIGHT: Coffee Was King Of Commodities In 2014


Nov. 6, 2021 (SpillingTheBeans)–Coffee prices are in uncharted waters and entering yet another round of crazy rally and panic buying at the ICE futures exchange in New York with prices moving toward consolidating in a new range of $2.30-$2.40/Lb, so the question is, will we see this chart return and end 2021 with coffee as the “King of Commodities” like last seen in 2014?

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By Drew Harwell

DEC 31, 2014 (WashingtonPost)–Coffee prices soared amid a historic drought and a growing global love for liquid caffeine. Gold and oil fared far worse. Here’s how the futures performed this year, as a percentage.

America’s favorite energy source, crude oil, has had a rough year, with prices by the barrel falling off a cliff. But the nation’s second favorite energy source — sweet, sweet coffee — has seen prices jump and futures jolt about 50 percent this year, making it the best-performing commodity of 2014.

Droughts that hit coffee belts and cattle ranches sent the price of beans and beef soaring: Bad news for drinkers and diners but great news for investors, according to data from financial-visualization service FinViz. (The benchmark contract for a heaping of coffee –37,500 pounds of Arabica beans – traded for about $1.68 a pound on Wednesday, up from about $1.20 at the start of the year, according to data from ICE Futures U.S., a commodity exchange.)

For futures traders, coffee was a better bet than gold, silver or platinum — and far more energizing than crude, heating oil and natural gas, which rounded out the three worst-performing commodities of the year.

So why was coffee priced so high? A historic drought in the world’s biggest coffee grower, Brazil, and a harvest-hurting fungus in the coffee-bean havens of Central America crimped the world’s supplies for much of the year, driving up prices at Starbucks, Folgers and the world’s coffee shops.

But rainfall returned to Brazil in force last month, helping quench what had become the worst dry spell in 80 years, and that has raised expectations for next year’s crop and driven futures prices down. That’s good news for java fans: Demand for coffee across the world, not just in the caffeinated U.S., has never been higher.

Droughts at pastures across the Great Plains also hurt the country’s cattle production, driving up the price of steaks and burgers and making cow futures a popular bet in the commodities trade. Dry weather hurt other crops, like wheat, though big harvests of corn and soybean also helped sink prices, too.

Oil had one of its worst years in half a decade amid construction slowdowns in countries like China and a global glut of the bubbling crude. Drillers in the U.S., who pumped out their biggest output in three decades, are now in a stare-down with the oil-drilling nations of OPEC, who refuse to slow their own supplies.

Gold, after a hectic year, has seen a small winter bounce as international tensions push investors over to shiny metal for safety. But analysts say a blooming U.S. economy and surging dollar has made bullion bars seem less attractive. Compared to coffee, it’s also way less fun to drink.


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