Coffee price at its highest level in 10 years – but can private investors continue to profit from it in the future?

Coffee is drunk all over the world and is one of the most popular drinks everywhere. As a renewable raw material, coffee is also a popular speculation object from whose price development private investors can also profit.

The coffee market has been characterized by some turbulence so far in 2021, which of course has also affected the price of coffee. Coffee prices, for example, are now higher than they have been for 10 years.

High coffee prices expected to continue in the medium term

On the Intercontinental Exchange futures exchange, the price of coffee futures has now risen higher than it has in 10 years. Global supply bottlenecks and extreme weather conditions in Brazil, one of the main coffee-producing countries, were the main reasons for the soaring coffee prices.

Experts expect coffee prices to remain high, at least in the medium term.

Extreme factors as price drivers

As with all renewable raw materials, weather conditions that affect the coffee harvest have an enormous impact on price development. The world’s largest producing country, Brazil, suffered from an extreme drought this year.

In some cases, lakes and rivers dried up completely, making transportation impossible. Coffee transport by sea was also more difficult than usual due to the drought. This was compounded by a surprise cold snap in July, which resulted in a much smaller harvest than usual.

The smaller harvest and more difficult transport routes in Brazil were compounded by geopolitical factors in Ethiopia and Vietnam, which further pushed up the price of coffee. In Ethiopia, the risk of civil war is increasing, which caused uncertainty in the coffee market, and in Vietnam, Corona caused supply shortages.

Important for investors – the medium to long-term price development

For investors who want to participate in the price development of coffee, the expected medium- to long-term price development is of particular interest. However, accurate forecasts and assessments of price developments are extremely difficult, even for experts.

Coffee, like many other renewable raw materials, has a limited shelf life and storage capacity. Weather conditions and geopolitical factors can therefore always affect prices at short notice without this being predictable.

Experts do not expect prices to fall for the time being

Even the experts cannot reliably predict how long the events of 2021 will continue to have an impact on the price of coffee. However, if the decline in production in Brazil continues, coffee experts believe there is a good chance that the price of coffee may rise even further.

Some experts, such as Maximilian Copestake of Marex, even believe that the coffee price will remain at a high level in the longer term.




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