Drought Woes Send Coffee Futures to $2 Bucks

For the first time in about two years, coffee futures have hit $2 per pound with the ongoing drought conditions that started in January in Brazil.  Coffee futures reflect eroding prospects for the world’s biggest exporter and producer of the product.
 
The current rains helping coffee crops are expected to disperse soon and dry conditions in Brazil’s top-producing state is expected to continue.  They are having the driest summer since 1972, and is leading a coffee importer to cut the crop forecast by 10%.

Coffee futures have hit two year highs as the ongoing drought conditions in Brazil call into question the size and scope of this year’s crop,” said Matt Zeman, a senior commodity broker at Kingsview in Chicago, regarding the current coffee futures situation.

Coffee futures up-trend has no sign of topping anytime soon.  The margin requirements for holding coffee positions have shy-rocketed to $7,920 so I have to be very selective about taking a position in this market.

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