Forget gold in metal form or black gold in the form of oil, it seems there is a new commodity on the block.

Prices of Robusta coffee have risen by 20% over the last three days to their highest in over a year.

There are two types of coffee, Arabica (Coffea Arabica) and Robusta (Coffea Canephora). The beans are grown in different locations and at different heights. Arabica is generally associated with altitude and is grown at between 800 to 2,000 metres above sea level. The first and better quality Arabica is derived from beans from Mt Marsabit in Kenya, Columbia, the mountains of Yemen and the highlands of Ethiopia and The Sudan. Robusta is generally acknowledged as lower quality and comes from western sub-Saharan Africa, Brazil, India, Indonesia and latterly Vietnam which has become a major producer of this bean.

Poor coffee harvests in Vietnam and Central America have caused a drop in global supply. The International Coffee Organisation (ICO) has put world coffee output at 120.6 million bags for 2009/10 against consumption, which the ICO puts at 134 million of the 60kg bags.


There is still hope that Brazil will come in with bumper crop numbers that will fill the gap in supply, but there are concerns over the weather. Brazil is the largest supplier of coffee on the planet and most of it is of the cheaper lower quality, but it does produce some high quality beans.

The rising prices have also caught some hedge fund managers out. They have made a lot of money over the last few years betting on falling coffee prices. But the recent surge in prices has left them facing large losses.

According to press reports analysts believe the price rise has more to do with speculators than a supply / demand imbalance that may be corrected soon anyway.

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