Christian of CPM Group said he thinks coffee will tread between $2.45 and $2.60 a pound over the next week or so amid supply concerns and large long positions by investors.
Recently there's been some supply concerns in Guatemala, the largest producer in central America, and Brazil. "Some Brazilian producers appear to be withholding some of their crop in the expectation of some higher prices," he said.
Christian said there's also been investors adding to their long positions on the Comex commodity exchange, which "going forward, cuts both ways." Christian explained that this inflow of money is, on the one hand, driving up prices. On the other hand, if investors believe that the prices have already peaked, they can dump their positions and the price could level off."But right now they have a relatively large long position and that could help keep the price up for a while. We don't necessarily see it moving sharply higher in the near term," Christian said. "But basically staying high." Christian noted that there's been a drive to encourage the consumption of chilled coffee drinks, as coffee producers try to drive away the seasonality associated with coffee demand. Coffee prices rose 1.8% month over month or 86% year over year in January, according to Jonathan Feeney of Janney Capital Markets.
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