<\/p>\n
Hedge funds and other financial speculators were to blame for \u201c80 per cent\u201d of the surge in coffee prices that created \u201cunbelievable\u201d volatility and uncertainty in the market, the head of the Lavazza coffee company said.<\/p>\n
Giuseppe Lavazza, chair of Lavazza Group, which owns the eponymous brand, hit out at the \u201cbig investment funds\u201d that had driven prices to levels that were \u201ctotally unsustainable for the industry, totally unsustainable even for the consumer\u201d.<\/p>\n
London robusta futures, the global benchmark, soared to a record high of more than $5,700 per tonne in January. Prices have eased since on hopes of improved harvests to about $3,500 per tonne this week. But the benchmark is still well above the historical average of $1,700.<\/p>\n
\u201cCoffee, over the last four years, where coffee prices rose so much, 80 per cent is speculation, especially hedge funds,\u201d Lavazza told a gathering of journalists on the sidelines of the Wimbledon tennis tournament.<\/p>\n
Factors such as bad harvests had contributed but the \u201chedge funds really made a difference\u201d.<\/p>\n
\u201cCoffee is a big market, but the futures market is a small one. So with [a small amount of] money, you can create a big, big tsunami,\u201d said Lavazza, the fourth generation of his family to lead the company. \u201cThis is not a big risk, but if they win the race, they can gain a lot of money.\u201d<\/p>\n
He continued: \u201cThe volatility and uncertainty that put into the market, it\u2019s really unbelievable\u2009.\u2009.\u2009.\u2009for roasters, for traders and even for producers.\u201d
\nCoffee consumption had fallen 3.5 per cent over the past two years due to the high prices, he said.<\/p>\n