Rabobank Warns Coffee Prices May 'Soar Out Of Control' As Stockpiles Plunge

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by Tyler Durden
Thursday, Feb 17, 2022 - 01:00 AM

Goldman's head commodity strategist and one of the closest-followed analysts on Wall Street told the audience of Bloomberg TV last Monday of commodity markets pricing in shortages. 

"I've been doing this 30 years and I've never seen markets like this," Currie told Bloomberg in an interview. "This is a molecule crisis. We're out of everything, I don't care if it's oil, gas, coal, copper, aluminum, you name it we're out of it."

This leaves us with one particular commodity that most Americans use daily, and it's not crude products, such as gas and diesel, but, in fact, coffee. Over 150 million daily drinkers might be subjected to prices that may 'soar out of control,' according to a new report from analysts at Rabobank, led by Carlos Mera. 

In agricultural markets, supply disruptions and lower exports from Central and South American producers have resulted in dwindling stockpiles of arabica beans on the ICE futures exchange. We noted not too long ago that ICE futures exchange hit their lowest level of storage of the bean in two decades. Coffee buyers are panic hoarding as some have switched from arabica to lower-grade robusta.

Mera warned ICE-monitored inventory could plunge to "half a million bags in three months," and the "fast pace of decertification could lead to uncontrolled prices spikes in the short-term." 

None of this should be surprising for ZeroHedge readers who have been well informed about the coffee troubles developing over the last year. We noted a nightmare of factors, including drought and frost, that have dramatically reduced output potential. There's also been logistical issues and soaring transportation costs.

Here are a few of our notes on the situation: 

Arabica prices on the ICE futures exchanges hit a decade high of $2.59 a pound, and if Mera is correct, prices could be headed much higher. 

Supply crunches are showing up on a seasonal basis. Prices have never been higher for this time of year except for 2011. 

For the 150 million Americans who are addicted to coffee, read our commodity note from six months ago, "A 'Cup Of Joe' Is About To Get A Whole Lot More Expensive," it was only a matter of time before prices would hyperinflate away. 

Rounding back to Goldman's Currie, everything is becoming a lot more expensive as the Bloomberg Spot Commodity Index powers to new all-time highs. And no wonder President Biden gave certain members of the Federal Reserve the go-ahead to release hawktard statements in the attempt to cool inflation because it's ripping apart households and damaging the president's polling numbers.