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As the following article from the Economist indicates, coffee as a commodity is in a bear market. There is a coffee ETF, CAFE which can be used to trade coffee.

Bear markets are the best time to initiate new positions. I am talking more about an investment time frame of 10yrs+. Cash is being destroyed worldwide through Central Bank inflation. It needs to go somewhere.

Currently commodities are hated because growth everywhere is slow, slowing or non-existent. Once the excesses of the system are burned away, which they will be, things will gradually improve.

Start investing, nibbling, in existing bear markets. Avoid the bull markets for the moment, as, will they sustain in the face of the end of liquidity? Although it has to be said that the liquidity has been pledged for some time to come.

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NOT everyone appreciates the pungent smell of roasting coffee. Just ask the authorities in Brazil, who have been faced with farmers burning bags of beans and chanting slogans borrowed from recent nationwide protests to demand fatter state subsidies. The farmers are upset by falling prices: their beans now fetch around $106 a 60kg bag, a four-year low and less than half what they could get a couple of years ago. A reversal looks unlikely soon.

A third of the world’s coffee is grown in Brazil. Along with other countries that mainly cultivate the tastier and pricier arabica-bean variety, it faces two problems. First, the traditional markets for their wares are saturated. Growth in Europe, America and Japan, which between them glug over half the world’s coffee, is flat. Second, in places like China, Indonesia and Brazil itself, where coffee is an affordable luxury for the middle class, the market is growing by around 5% a year. But these drinkers are filling their pots with cheaper robusta beans—what Kona Haque of Macquarie dubs the “emerging-market coffee”.

Strong demand for entry-level coffee—40% of the world’s coffee crop is now robusta beans—has enabled Vietnam to go from almost nothing a decade ago to producing 25m bags today (see chart). Worse still for arabica producers, the recession in Europe has hit demand and squeezed profits for roasters. These processors, including big food firms such as Nestlé and Kraft, have responded by blending cheaper robusta with arabica. As a result robusta prices have not fallen as fast as arabica. Even so, the narrowing gap between them has not yet prompted beancounters to reintroduce the costlier variety.

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