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Dissent brews over world coffee market as arabica futures fail to relect prices

Thursday, October 14, 2010

Dissent is brewing in the coffee market. Market participants say the benchmark futures contract for the arabica variety doesn't reflect real-world prices.

This leaves big coffee distributors and cafe owners in a bind: With futures lagging the current market price of coffee, roasters are unable to adequately hedge their costs and compensate for sharp price swings.

This means surging prices for the beans will trickle down more quickly. With successive crop failures in Colombia and Central America, the surge in cash prices has outpaced increases in the price of futures contracts.

Fuente original: Dow Jones