Following soaring cocoa bean prices and accelerating global food inflation, Arabica coffee bean futures prices also climbed to their highest point in a year and a half.
Arabica bean futures for May delivery surged 12.5% last week, the biggest weekly gain since July 2021, closing at $2.12 a pound.
The price of this contract is the highest since the beginning of October 2022.
According to the CFTC's latest weekly report, the number of net long contracts in the futures and options markets is at an all-time high.
Aakash Doshi, senior commodity strategist at Citigroup, pointed out in the report, "The current sharp increase in prices is mainly due to the heat wave in Vietnam, which has affected the production of Robusta coffee beans, which in turn has indirectly pushed up the price of high-quality Arabica coffee beans." ”
Doshi expects Arabica bean futures prices to remain in a range of $1.88 to $2.15 throughout 2024. He also said that if production tightens, prices could rise further.
At the same time, Hernando De La Roche, senior vice president of StoneX Financial, said in an interview with the media that market dealers are passive and forced to close short positions, while funds are increasing their long positions, and importers have to abandon their original hedging strategies.
In addition, some analysts believe that geopolitical tensions in the Middle East have led to a sharp rise in Brent crude oil prices recently, which may start to put upward pressure on global food prices.
Persistent food inflation is undoubtedly an even tougher challenge for the world's major central banks.
This article is from Wall Street News, welcome to download the APP to see more