The Economist noted last week that “a shortage of premium Arabica beans from Colombia (the world’s second largest producer behind Brazil) and Central America has sent coffee prices shooting up by 25% since the beginning of this year, and traders expect wholesale coffee prices to increase further before the arrival of the new Brazilian crop later this year.”  Bloomberg reported yesterday that “persistent wet weather in Colombia may hamper a recovery from last year’s 33-year production low by depriving plants of sunlight,” according to Jorge Lozano, head of the National Association of Coffee Exporters.  Meanwhile, inventories of arabica coffee in warehouses monitored by ICE Futures U.S. have dropped to the lowest level since May 2000.  Yet Sudakshina Unnikrishnan, a commodities analyst with Barclays, maintains that the price spikes in Arabica and Robusta coffee are not linked to underlying supply and demand issues.  “There is no fundamental reason for coffee prices to have increased so much in recent weeks,” she said back in June.  “Although global inventories have come off over the last few years for the 2010-2011 marketing year we are expecting Brazilian production to be very high.”

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