Coffee and crude are latest ‘odd couple’

Chris Taylor

12/07/2011 12:35:06

Financial analysts have branded coffee and crude oil “sisters” as the pair seem to share the price fluctuations in the commodities market.

The strange relationship between the two was highlighted in an Agrimoney.com report, which also featured other instances when the odd pairing of unrelated goods occurred.

For example, copper and wheat, and gold and farmland preceded this latest oddity. Speaking to the food investors’ website, Jurgens Bauer at US-based PitGuru joked: “A savvy old school trader points to coffee and crude prices acting like sisters.”

Trying to understand the phenomenon, Agrimoney.com suggests that the developing world has acquired a taste for coffee pods and produce in the same way that it needs fuel, according to the story cited by a Trading Weeks blog.

London broker Marex said the correlation between the two assets was “particularly tight” and a spokesperson went into some more detail about how the pair have been flirting with one another on the stock market.

According to the spokesperson: “Crude topped on May 2 and then fell 22 per cent. Coffee topped on May 3 and then fell 22 per cent.

“Crude has since put in a bottom on May 23 and then retraced 8.2 per cent, and coffee put in a bottom on May 23 and then retraced 11.5 per cent. The correlation between coffee and crude even goes down to the hourly charts,” they added.