Future Growth Of Volatile Cocoa & Coffee Rests In Emerging Markets

December 08, 2014

 

 

Investing In Coffee

The two most obvious options are: exchange traded products (ETPs) and futures.

ETPs

Two specifically coffee ETPs (in the form of ETNs—so there will, for each, be a credit risk related to the issuing institution) available in the U.S. are:

  • iPath Dow Jones-AIG Coffee Total Return Sub-Index ETN (JO)
  • iPath Pure Beta Coffee (CAFE)

 

And ETF Securities in the U.K. actually has a number of coffee ETPs: ETFS Coffee (COFF), ETFS EUR Daily Hedged Coffee (ECOF), ETFS Short Daily Coffee (SCFE LN) and ETFS Daily Leveraged Coffee (LCFE LN).

Futures

Coffee futures, both robusta and arabica, used to be traded on the Tokyo Grain Exchange, but after it was acquired by the Tokyo Commodity Exchange last year, these ceased to be offered. Coffee futures are now traded on both ICE and CME, and also on the Singapore Commodity Exchange and BM&F Bovespa in Brazil.

In 2014, the price of coffee shot up from January through May and has not fallen that far from its highs earlier in the year. Indeed, in October, there was another brief surge in its price, leading to a new high for the year. According to the ICCO, the average monthly price in October (172.88 U.S. cents/lb) was the highest it had been in over 2 1/2 years.

 

ICE Coffee Front Month – Settlement (US$)

Source: Quandl

 

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