- Coffee prices continue to fall as strong El Nino rains in Brazil help to boost crop yields. The next harvest in the nation is forecast to be up 20% Y/Y at 58M bags.
- Even with Arabica prices down 28% this year, analysts see another swing lower for coffee in 2016 due to the oversupply situation.
- Weak currencies in South America are also providing a strong incentive to local producers to sell as much as they can.
- The trend toward low coffee prices is helping to lift margins for many coffee sellers with U.S. retail prices only down 4% to 5% this year. Companies light on hedging positions are seeing the biggest benefit.
- Most execs play coy over the bottom line benefit of lower coffee commodity prices, but even Starbucks CFO Scott Maw had to concede that pricing looked a "little bit favorable" during the firm's last earnings call (transcript).
- Coffee futures chart
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