Following the largest daily surge in Arabica coffee futures since the Dot-Com bubble, the head of Italian coffee giant Lavazza Group warned that prices are unlikely to fall over the next two years.
Giuseppe Lavazza, chairman of the Italian roaster, was quoted by Bloomberg as saying, "The market needs to have stability before it's time to think about a reduction of prices."
Lavazza explained that it will take two harvests and a massive rebuilding phase to replenish inventories and ease supply constraints, making lower prices unlikely over the next two years.
On Monday, Arabica futures in New York posted their biggest jump in 26 years, as worsening weather in Brazil and shrinking exchange-managed stockpiles fueled a rally. The violent move higher was not just weather-driven. A big short squeeze also materialized.
That sent 60-day volatility to the highest since 2014 levels - a period where weather-driven supply shock in Brazil dented global supplies.
Making matters worse is the READ MORE AT SOURCE »
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