Monday, February 25, 2008

Anyone for coffee?

In an article I wrote back in April 2006 I had talked a little about the expectations for soft commodities. My outlook at the time for coffee and cocoa where overshadowed by the subsequent rallies in the grains (corn in particular). However, taking another look at the long term chart for coffee there is an almost picture-perfect breakout from a cup-and-handle pattern for February with a 1996 price high of $300+ to aim for:

Factor in growing demand from China (via Maoxian) and you have a nice recipe for future growth. Any supply problem from a crop failure would really set the cat amongst the pigeons.

I did a quick search for stocks with coffee in their title and came up with the following: CBOU, DCFF, DDRX, GMCR, GWDC, JVA, PEET, SWS/UN.TO. Unfortunately, for companies like Peet's, Caribou's, and Starbucks, rising coffee prices will hurt these stocks.

The London Stock Exchange has a Coffee ETF (COFF), but I couldn't find something comparable for the U.S. market (???).

I wonder what the next 12 months will bring?