| Is coffee the safe haven for investors looking for | | | | comes to trading seasonality commodities, many |
| the next commodity to invest in? It is clear from | | | | investors tend to overlook this one single fact, |
| the title that I am very bullish on this particular | | | | and this can result in devastating losses to the |
| commodity, and rightly so, which I have been for | | | | investor. However, if this seasonality factor is |
| many years now. For much of the last decade, | | | | taken into account and observed religiously, |
| the prices of coffee has been significantly lower | | | | massive gains can be achieved. Seasonality of the |
| than the cost of production, which resulted in little | | | | coffee commodity dictates the rise and fall of |
| or no incentive for countries to produce this | | | | future prices at a particular time or a year, every |
| product at all. Coffee growing lands were | | | | other year, or in a defined cycle of years. As we |
| converted almost instantly to other more | | | | know, every other year, coffee producing nations |
| lucrative commodities such as oil palm, rubber and | | | | turns out massive crops, straining the coffee |
| other agricultural commodities. So, which such an | | | | trees, and thus they will go through a smaller |
| outlook over the last ten years, is it now time to | | | | production season the following year, resulting in |
| invest in coffee? | | | | large oscillating prices in the traded futures. Last |
| Since the last decade, the coffee situation has | | | | year was a surplus year, adding to the stock |
| improved and progressed rapidly, became the | | | | surplus, and thus this year, will be a deficit year, |
| biggest demand driven bull runs in prices of coffee | | | | to the tune of 10 million bags. This is a significant |
| futures. This simple fact alone accounts for my | | | | deficit. And this comes at a time of ever |
| take that this commodity is the single best | | | | increasing demand. |
| investments of 2009 till 2011. | | | | Since many other more popular commodities has |
| Coffee has a long and unique story to tell. Ever | | | | their reasons to collapse due to rapid decline in |
| since the spike in future prices hitting $3.50 way | | | | demand worldwide, compounded by the economic |
| back in 1997, the supply has risen by leaps and | | | | problems we are now facing, coffee has been |
| bounds. The supply of coffee has increased | | | | benefiting from the increased in home |
| primarily driven by the strong demand worldwide. | | | | consumption worldwide. Demand has not slowed |
| And in the last few years, the increase in | | | | down in any way, and in fact, looks to have |
| worldwide consumption has far exceeded the rate | | | | increased over the last several months. Coffee is |
| of production, forcing many coffee producing | | | | and always has been in high demand, and there |
| nations to sell this copious commodity in gradually | | | | simply isn't enough of it. The market for this |
| increasing prices. Slowly but steadily, the reserves | | | | commodity technically shows a clear sign of a |
| in the hands of producers, has dwindled to its | | | | bottom in place, and the start of a new upward |
| lowest levels in 30 years, and has reached it's | | | | trend. |
| lowest stock relative to worldwide consumption | | | | So, do keep your eyes and nose on the coffee |
| levels of today. | | | | market! |
| Coffee is a seasonality commodity. When it | | | | |