Coffee is the worst performing soft commodity this year as rains in Brazil drive down prices, but experts say positive fundamentals should translate into a solid rebound.
Arabica coffee listed on the Intercontinental Exchange (ICE) is down over 20 percent year-to-date, with prices hovering at one-year lows around 130 U.S. cents per pound. But commodity analysts at Rabobank expect prices to climb 15 percent to 150 cents by year-end.
"The fundamental wheels of coffee should exert their upward pressure in the coming months as a significant supply deficit materializes in further stock declines both in producing and non-producing countries," Rabobank said.
Coffee outperformed among soft commodities in 2014 as a drought in Brazil – the world's largest coffee producer – limited supplies. However, favorable weather spurred heavy selling this year, which has been exacerbated by the Brazilian real's around 33 percent decline against the U.S. dollar over the past six months.