Coffee smells good
Central American landowners who can convert suitable properties to coffee production at low risk may want to move quickly. These properties include grazing land at relatively high altitudes, along with farmland currently dedicated to low-yield crops.
This month, coffee prices on world markets rose to $3 a pound, their highest level in 34 years, even though exports in 2010 were 16% higher than those of the previous year. In part, high prices may be a result of bad weather in Colombia.
Another factor involves speculation that commodity prices in general are likely to rise over the coming months. These may be only short-term trends, which may not create enough incentive to invest in coffee plants, which need a minimum of three years to produce beans.
On the other hand, increased demand for coffee in major emerging markets, including Brazil and China, could push up coffee prices for an extended period.