Rising Prices for Coffee, Cotton and Cocoa

A Wall Street Journal article (January 22, 2011) describes rising prices for commodities such as coffee, cotton and cocoa. Reasons for this estimated price increase, as reflected by rising prices of futures, are global.  Significant rainfall in Colombia is expected to impact the arabica bean harvest – thus decreasing global supply and increasing prices.  Political instability in the Ivory Coast is causing worries about cocoa bean supply, thus impacting cocoa prices. And a surge in imports of cotton by China, a reported 86 % rise in 2010 over last year, along with lower harvests in Pakistan, are estimated to drive up cotton prices.  How will the market react to these projections ? Will demand be diverted to other fibers, will new coffee growers join the market and will increased cocoa production from other sources impact the market ? Or will retail prices for these commodities rise and thus create inflationary pressures in many markets, further increasing global political turmoil ?

About aviyer2010

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