Seeking Alpha

Coffee prices at 5-year low

  • Arabica coffee prices fell to a five-year low as the harvests in Brazil and Colombia continue to come in bountiful.
  • The price on a December Arabica contract fell to $1.031 to mark the lowest level for a most-traded contract since 2008.
  • Related stocks: SBUX, GMCR, SJM, KRFT, CBOU, JVA, KKD.
  • Related ETFS: JO
Comments (8)
  • So, is low coffee prices good news or bad news for (SBUX), (DNKN), (KKD), (JVA), and (GMCR).
    7 Nov 2013, 08:10 AM Reply Like
  • Michael wouldn't you think it is like oil prices and gas?

     

    That the coffee brands don't have to lower the prices of their drinks immediately, if ever.
    7 Nov 2013, 10:32 AM Reply Like
  • Is great news for SBUX, considering a bulk of their coffee comes from Brazil and Columbia. As Samuel mentions, their coffee sell price to consumers will remain the same. They have more opportunity to setup promotions for their bean/drinks for even greater sales volume.
    7 Nov 2013, 11:54 AM Reply Like
  • It is god news but not great news for the likes of SBUX as most of their costs come from labor. The cost of coffee is actually a minor cost of doing business for them. That being said it's not bad news.
    7 Nov 2013, 03:44 PM Reply Like
  • And after looking at the 25 year futures chart, it can go quite a long ways lower than where it is now over the next 3-5 years.
    Then, however, after farmers have ripped out 50% of their bushes to plant sweet taters (or whatever else pays more), you probably should buy some coffee futures. $JO
    7 Nov 2013, 06:41 PM Reply Like
  • Not good news. Prices tend to get more competitive at retail and the finding top qualities will become more difficult. In short run yes a minor plus. This category was built on quality. I don't know anybody in the industry happy with 1.03 market.
    8 Nov 2013, 08:12 PM Reply Like
  • SBUX is not top quality, neither McD's so where's the coffee inflation.

     

    At least those shareholders ought to do well.
    8 Nov 2013, 10:37 PM Reply Like
  • While some of the price cuts have (ahem) filtered down to retail stores, coffee's price is still too volatile for distributors to make big bets on it remaining low, so they may be unwilling to lower the price too much. If you look at the past few years worth of NYMEX coffee futures, although they're around $1 now, a few years ago they were over $3, and spent around a year and a half over $2.
    9 Nov 2013, 06:31 PM Reply Like
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