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How to Evaluate Commodity Coffee Prices

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Analyzing Commodity Coffee Prices

commodity coffee pricesIf you want to invest in a commodity coffee prices should be analyzed to determine whether or not the coffee market is a suitable place for your investments. Like any commodity, coffee prices will be affected by supply and demand. Therefore, environmental, political, and economic factors will all play a part in determining its value.

Current Commodity Coffee Prices

As of August 30, 2011, Coffee Robusta is trading at 123.75 cents per pound. In January of this year, prices were under 107 cents per pound. There has been an increase of about 30% in the past 12 months of commodity coffee prices.  This makes it a good commodity choice for 2011, with great prospects for 2012 as well. Other top performing commodities of 2011 include crude oil, corn, and gold.

Contributing Factors

Environmental factors which may contribute to a decrease in supply include drought, flooding, and disasters—hurricanes, fires, and tornadoes. Problems like these may result in a decrease in supply. A lower supply, combined with high demand, will result in an increase in the crop’s value. Meanwhile, an oversupply of the product will translate into lower market prices.

Economic and political factors can also make an impact upon the market value of coffee. A depressed economy may result in lower demand for coffee, due to consumer uncertainty. Policies affecting taxes and trade can also play an important role in the rising and falling of commodity coffee prices.

When you are evaluating the commodity market to determine whether or not to invest in coffee, be sure to look at past performance trends. Note significant rises and dips in value, and try to determine possible contributing factors that could have caused the dramatic changes. Analyzing commodity coffee prices is an important step in determining which stocks in which to invest.

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