2010 forecaster eyes $4/lb coffee by end-2011
Hackett sees arabica at $4/lb by end-2011
Tight supplies seen driving price increase -Hackett
Hackett pegs robusta up at $3,300/tonne by year end
YORK | Jan 7, 2011 1:45pm EDT
By Marcy Nicholson
YORK, Jan 7 (Reuters) - Tight supplies of washed arabica
coffee should push prices up to a steep $4 a lb by the
of 2011 and robusta beans will follow in tandem, said
who came closest to predicting last year's 77 percent
in a Reuters poll.
Shawn Hackett, president of Hackett Financial Advisors,
in Florida, seemed to be aiming out of the ball park
ago when he forecast the spot arabica futures contract
trading on ICE would reach $2.50 a lb by the end of
His projection, the highest of the 21 analysts who responded
to the biannual survey, was the closest to reality.
After a fund-fueled rally exacerbated by tight supplies
the market to a steep rally in the last half of 2010,
market finished the year at $2.4050 per lb, after hitting
high at $2.4225 earlier in December.
The median estimate in the January poll was $1.39/lb.
the only analyst to forecast a year-end price above
faced phone calls and nasty emails following the poll's
when people told him he doesn't understand the business
and called him a "scheister".
the nature of being a contrarian ... you have to be
very differently from the crowd and the crowd is usually
wrong," Hackett said, in a telephone interview.
steep call was based purely on fundamentals, looking
at the huge disparity between cash differentials and
futures price at that time, as top washed-arabica grower
entered its second year of significantly smaller crops.
thesis was that scarcity would eventually play itself
in the futures market, and it did," Hackett said.
essentially have cleaned out producer stocks. Demand
only be satisfied now by what is produced." Colombia
is now in its third year of lower production and
forecasts arabica futures are in for a 65 percent ride
this year. Liffe robusta futures <LRCc2> will
follow to reach
$3,300per tonne by the end of 2011, from $2,097 at end-2010.
no reason it (robusta) shouldn't follow because there's
not going to be any supply to stop it," Hackett
said, adding he does not expect the wide spread between
the two markets to increase.
Technically, another indicator that the arabica market's
move is not over is that it has not yet seen a spike
an extremely fast and sharp move up that ends the bull
in coffee, he said.
The spot arabica contract last saw such a move in 1997
shot up nearly 130 percent to $3.18 per tonne over four
It then fell 50 percent two months later and continued
through to 2001. The 2010 sustained rally was slower
orderly. (Graphic: http://link.reuters.com/ket35r )
Hackett cautioned that the commodity complex will likely
a setback in the first quarter of 2011 that could temporarily
take coffee down with it. This would provide a good
opportunity to buy coffee with Hackett's perspective
commodity investments should be viewed on longer-term
should have a pretty good view of where things should
over a 12 to 18 month horizon, understanding the next
are completely unpredictable and no one can forecast
months with any degree of accuracy," Hackett said.
He admitted his three-month forecasts have often been
while his longer-term forecasts have been "extremely
you invest in commodities in a similar fashion that
in stocks, you'll do very well. Everyone keeps wanting
their accounts and hyper-trade markets, and what winds
up happening is they miss the big move," he said.
Hackett was a stock broker with Princeton Securities
in New Jersey
from 1990 to 2002. He shifted to agricultural commodities
with Roach Ag Marketing in Florida for five years, where
he worked as a commodity broker. In 2007 he opened his
commodity brokerage advisory firm, which specializes
commodities and clears through R.J. O'Brien & Associates.
Currently, about 2,000 people subscribe to his reports.
by Marcy Nicholson; Editing by David Gregorio)