All you java junkies may have noticed that your morning brew costs a bit more these days. That’s because coffee prices as measured by U.S. futures are up more than 50% in 2014.
The reason? A drought in Brazil, the world’s largest exporter of coffee, has weighed significantly on crops recently. Coffee is at its highest levels in about 16 months as a result.
And the trend may not mitigate any time soon, either. The Washington Post reports that a mix of rising demand and hot, dry weather (perhaps caused by climate change?) is driving a coffee shortage that seems to be getting worse.
If you want to play this coffee crunch, you have two simple ways via “exchange-traded notes” or ETNs: The iPath Dow Jones-AIG Coffee ETN (JO) and the iPath Pure Beta Coffee ETN (CAFE). These investments can be traded easily in most IRAs or brokerage accounts like a conventional mutual fund or ETF, but are made up of futures contracts instead of constituent stocks.
Both investments are up more than 50% this year, reflecting the direct increase in coffee futures.