Hedge funds bet on a collapse in coffee prices

TRADERS are betting that the price of coffee will fall further following heavy rainfall in Brazil and bumper harvests in Honduras and Uganda.

The price of arabica coffee, the high quality bean that represents about 60pc of global production, has fallen by nearly 30pc in the past year to around $1.25 a pound.

But figures from the US Commodity Futures Trading Commission show hedge funds and other speculators are betting on further falls in the coming months. The net short position held by speculators – the difference between bets on price rises and price falls – is about the same size as the annual coffee exports of Colombia.

‘The numbers are amazing,’ said James Hearn, co-head of agriculture at commodity brokers Marex Spectron.

Traders believe the price could suddenly rise again if rains peter out in Brazil or exports are hit due to problems with roads and ports in countries that produce arabica beans.