The "There Is No Inflation" Report: Coffee Price Surged 20% Last Week

Arabica coffee posted its biggest weekly gain in over 14 years on Friday.

Arabica gained almost 20 percent on the week, its largest weekly rise since December 1999. Natural gas climbed 16 percent,
its biggest gain since a 20 percent jump in the final week of January.

For the year, both commodities were up 50 percent.

To be sure, drought conditions are an importnat catalyst to the coffee spike and an unusually cold weather is the catalyst to the spike in natural gas, but the intensity of the gains suggests that newly Fed printed money is available to push the prices, once they get going.

Reuters reports:

 The ferocity of the gains, including a more than 10 percent jump in both markets on Wednesday, has taken traders aback, with some suggesting that momentum traders and hedge funds may be rushing into a fundamental rally late in the game.
 
Analysts said the gains also speak to a larger phenomenon that has transformed commodity markets over the past year. Major raw material indexes, and the commodities they track, have decoupled from stock markets and foreign exchange rates to chart an independent course, ending a five-year period of unprecedented correlation following the financial crisis.

How to trade the coming commodity boom is covered in the EPJ Daily Alert.