A Caffeine Jolt For Your Portfolio
Instead of ordering a Double Grande Extra Dry Cappuccino from Starbucks (NASDAQ: SBUX) for yourself, you may want to buy one for your portfolio. Coffee prices have been on a rally, jumping more than 9.8% in a few days of trading. The supply of high quality coffee beans from Brazil is severely under demand expectations and exporters are paying top dollar for the beans. Scarcity of supply is also affecting producers from Mexico and Colombia. Output also declined in both Africa and Vietnam.
Global stockpiles have offset low production versus high demand circumstances for the past ten years, but with stockpiles now depleting, coffee prices are finally reflecting lower production. Analysts see coffee prices moving to $3 a pound over the next 6 to 12 months.
Investors wanting to cash in on the trend can do so with the iPath DJ-UBS Coffee ETN (NYSE: JO), currently the only pure way to play java. The exchange traded note is up nearly 12 percent in the last month.
