Seeking Alpha

Coffee prices on the rise

  • Coffee prices could be driven higher later this year due to high demand for premium beans and a tight supply as a result of a harsh drought in Brazil.
  • The International Coffee Organization forecasts H1 coffee production will be down close to 5%.
  • The wildcard: An early outbreak of El Nino could also disrupt crops across South America.
  • What to watch: Starbucks (SBUX), Tim Hortons (THI), McDonald's (MCD), and Keurig Green Mountain (GMCR) could get pinched if coffee prices push significantly higher. Analysts note not all of the input costs can be passed off to consumers and hedging strategies weaken above a price level of $3/pound.
  • Related ETF: JO
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Comments (6)
  • benitus
    , contributor
    Comments (2526) | Send Message
     
    When GMCR stubbornly refused to rise above $124 after KO increased its stake in the stock, I had reluctantly shorted this stock (instead of waiting for $125), and this so-called negative news may actually bring the price back down below $110 again, which would reap me a windfall, as had been expected last week.
    14 May 2014, 11:35 AM Reply Like
  • markb
    , contributor
    Comments (509) | Send Message
     
    This is kind of a weird headline because coffee prices are actually down 14% from April's peak.
    14 May 2014, 01:37 PM Reply Like
  • ParisJOM
    , contributor
    Comments (190) | Send Message
     
    Maybe the author forgot to hit the "Enter" button for a few weeks ?
    14 May 2014, 04:43 PM Reply Like
  • tripitin
    , contributor
    Comments (2) | Send Message
     
    As mentioned in the original WSJ article, the producers in Brazil are currently using their reserves from 2013 to meet higher-than-usual demand, but at some point those stockpiles will dissapear, the crop from this year will not be enough to meet supply, and the price will rise again. Is the perfect storm...the current price is $1.85/lb, and some analysts expect it to rise to $3/lb.
    14 May 2014, 06:38 PM Reply Like
  • Michael Bryant
    , contributor
    Comments (5914) | Send Message
     
    Just bought (JVA) a month or so ago. Hope this will pay off.
    16 May 2014, 08:23 PM Reply Like
  • Michael Bryant
    , contributor
    Comments (5914) | Send Message
     
    Is there any way you can directly invest in coffee bean producers other than buying futures contracts?
    16 May 2014, 08:25 PM Reply Like
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