The prices of arabica coffee, gold and silver – all important Colombian commodities – have soared to record levels due to low supplies and investors shying away from unpredictable currencies, Agrimoney and Reuters reported Wednesday.
Arabica coffee traded above $3 per pound, a level it has not seen since 1977 when a severe frost in Brazil two years earlier cut output. The highest price paid for july, the most commonly traded variety of arabica, was $3.025 a pound. This high price is said to be a result of lower than expected output and continued high demand.
Colombia is the world’s second largest producer of high quality arabica beans after Brazil. Colombian coffee cultivators said in December 2010 that the wetter than usual rainy season may have a negative effect on this year’s harvest. According to the International Coffee Organization, while production has been able to sustain regular levels, the demand for coffee has outstripped supply for the fourth year in a row.
In addition, gold has reached an unprecedented high of $1,505.40 an ounce and silver a 31 year high of $44.79 an ounce. Precious metals is another important sector for Colombia with several foreign companies including Greystar, Orofino, Mercer, Gran Colombia Gold and Medoro owning mines or concessions within its borders.
The price of gold rose internationally as primarily U.S. and European investors are beginning to view it as even more of a safe haven of value instead of shaky currency.
Demand for gold in India and China has been growing due to stronger inflation and rising consumer incomes which also drove up prices. Simon Weeks, head of precious metals at the Bank of Nova Scotia said, “Gold has been acting as a currency in its own right, and that is why we are up at $1,500.”
On Thursday, the U.S. dollar fell to its lowest rate against the Euro for 15 months ($1 is now worth €0.68724) while Greece, Ireland and Portugal are all in the process of receving or requesting bailouts from the EU and IMF.
Furthermore, the Colombian peso reached its highest level against the dollar on Wednesday since August 2008.