The price of Robusta coffee has surged by almost 70% since the same stage last year, when it was worth just over US$1 100. Prices have almost tripled in value since November 2004. Coffee prices in London have rocketed as investors fret over lower exports from Vietnam, which is the world's second biggest coffee producer. "Essentially Vietnam is the worry," said Denis Seudieu, chief economist at the London-based International Coffee Organisation (ICO).
"Not only are supplies there struggling to keep up, but the coffee is of a poor quality and many batches have recently been rejected at European ports."
The concerns have also buoyed the price of Arabica beans which are mainly grown in Brazil, the world's leading coffee producer. High-caffeine Robusta, a bitter variety used in instant coffee, and the more expensive Arabica are the two most widely traded types of coffee.
"The stocks situation is particularly tight for Robusta and that's the main factor... causing the LIFFE price to go up," added a trader at a London brokerage who wanted to remain anonymous. "The feeling we get is that the roasters are building up their stocks of Robusta again, after having depleted them, and that is one of the factors driving the reduction in apparent stocks in warehouses."