Hackett Advisors in the News

By Chris Prentice - Feb 24, 2011 12:00 AM ET

Coffee May Jump 48% as Demand Can’t Be ‘Satisfied:’ Chart of Day

Coffee prices, which have doubled in the past year, may rally another 48 percent to the highest since at least 1972 as demand outpaces supply, according to Hackett Financial Advisors Inc.

The CHART OF THE DAY shows that coffee has surged as demand grew in countries that ship the commodity, including Brazil, the world’s biggest producer. Prices may climb to $4 a pound in 12 to 18 months as demand gains 3 percent in the exporting countries, eroding dwindling stockpiles, said Shawn Hackett, president of Hackett Financial.

“The current demand cannot be satisfied,” Hackett said by telephone from Boynton Beach, Florida. “The price will continue to go up until people who drink coffee drink less.”

Rising consumption in emerging economies will be the main driver for coffee prices, Hackett said. Accelerating economic growth boosted demand in exporting nations by 23 percent since Sept. 30, 2005, according to data from the International Coffee Organization. In that time, stockpiles in the nations have plunged 65 percent, the group said.

Yesterday, arabica coffee for May delivery fell 1.8 percent to $2.6945 a pound on ICE Futures U.S. in New York. The price touched $2.784 on Feb. 22, the highest since May 1997. The commodity touched $3.375 in April 1977, the highest according to Bloomberg data that starts in 1972.

ICO data is based on an average global crop year that runs from October through September.


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