NEW YORK (TheStreet) -- Coffee prices continue to rocket higher because of traders' concerns over dry conditions in Brazil. TheStreet's Debra Borchardt said Arabica coffee beans are up 9% on Wednesday, the largest one-day gain since November 2004.
Coffee prices have rapidly risen 38% year-to-date, to a 13-month high of $1.5265 per pound.
Brazil, the world's largest supplier of coffee, has already lost 5% of this year's crop due to the extremely dry conditions experienced at the start of the growing season, Borchardt said.
A few ways investors can play along are through the iPath Dow Jones-UBS Coffee Subindex Total Return ETN (JO), which is up more than 18% in the past two days, and through the iPath Pure Beta Coffee ETN (CAFE), which is up by roughly the same percentage in the same period.However, despite the jump in coffee prices, consumers are unlikely to feel the pinch just yet.
Borchardt pointed out Starbucks (SBUX), Dunkin' Brands (DNKN) and Green Mountain Coffee Roaster (GMCR) buy their coffee beans in advance to avoid the volatility from short-term market swings. These big buyers won't be back in the coffee market for several months, by which time things might have settled down, she said. -- Written by Bret Kenwell in Petoskey, Mich. Follow @BretKenwell
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts