A punishing drought in Brazil has sent the prices of sugar and coffee soaring, and some analysts expect the cost of the popular morning stimulant to continue its climb.
May Arabica coffee futures traded on the Intercontinental Exchange (ICE) have risen 69 percent since hitting a four-year low in November, and on Monday rallied to $1.7635 per pound, its highest level since October 2012. Raw sugar contracts traded on the exchange, meanwhile, saw their biggest one day rally of 4.1 percent in nearly five months on Monday, jumping to 17.41 cents a pound.
Jonathan Barratt, chief investment officer at Ayers Alliance, told CNBC Asia’s “Squawk Box” on Monday that extreme weather conditions in Brazil and India have dramatically altered the supply/demand dynamic in the global coffee and sugar markets.
“Coffee and sugar – in fact all soft commodities – are looking good. We can expect surpluses to be sucked up and prices to go higher,” said Barratt.