Arabica coffee prices may be set for a “straight up vertical spike” to a record $4 a pound by the end of the first quarter with daily gains of 50 cents a pound after climbing to a 13-year high last week, researcher Shawn Hackett said.
Coffee is no longer a “value commodity” and roasters are facing a “panic stricken demand rationing orgy,” Hackett, president of Hackett Financial Advisors Inc. in Boynton Beach, Florida, wrote in a report dated Dec. 18. Prices for robusta coffee traded in London may climb to $2,500 a metric ton on rising demand from Asia and lack of production growth from Vietnam, the world’s largest grower of the beans, Hackett said by e-mail yesterday.
Rains in Latin America will likely keep coffee production from exceeding output for the last two years, according to Hackett. Arabica coffee will probably end the year at $3 a pound, Hackett said.
Coffee futures in New York on Dec. 17 jumped to the 13-year high of $2.267 a pound. Robusta coffee in London closed the week at $1,986 a ton.
Rice, cocoa, lumber, milk and natural gas are commodities that still have “pockets of value,” according to Hackett. The Continuous Commodity Index of 17 raw materials futures will probably climb to a record by year-end, he said in yesterday’s e-mail. The index closed on Dec. 17 at 603.35 and the high is 615.04 on July 3, 2008, according to data on Bloomberg.