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Coffee demand outstrips supply; coffee stocks up for commodity squeeze?

Posted Feb 19th 2009 6:22PM by Sarah Gilbert (RSS feed)
Filed under: Analyst Reports, Starbucks (SBUX), Kraft Foods'A' (KFT), Commodities

Coffee is set to be "one of the most promising commodities of 2009," according to a leading Swiss commodities analyst, who predicts coffee prices will rise, likely squeezing the already-decaffeinated profits at Starbucks (NASDAQ: SBUX) and Kraft (NYSE: KFT), maker of Maxwell House, among other major coffee retailers. Current prices are $1.1305 a pound, only up a 0.9% on the year, but experts predict greatly increasing costs due to declining production in Brazil and Colombia. Coffee futures are currently at $1.20 per pound for December 2009 contracts, and $1.227 per pound for March 2010 contracts.

How much price runup are we talking? It could be increasing a whopping 50% to $1.70 per pound by June 30, according to former Merrill Lynch analyst Judith Ganes-Chase, who runs a consulting firm in Katonah, New York.

Continue reading Coffee demand outstrips supply; coffee stocks up for commodity squeeze?

Brazilian exec expects int'l coffee prices to rise in near term

Posted Jul 6th 2006 4:45PM by Michael Canfield (RSS feed)
Filed under: International Markets, Industry, Starbucks (SBUX)

Coffee rose to over $1.00 per lb. in May and CEO Washington Rodrigues of Ipanema Coffees predicted prices will stay there 'til September or later because of "tight supply" he said in an informative interview (via easybourse.com) by Kenneth Rapoza of Dow Jones Newswires last month. So far they have, mostly: (NYBOT:KC). Rodrigues also sees international prices rising "in the near future, but worries the dollar will cut into [Ipanema's] margins, already some of the best in Brazil."

Though many think of Brazil first when it comes to countries that produce coffee, beans from that market have never been a major part of Starbucks' [SBUX] offerings. In fact, Ipanema Coffees is the U.S. co.'s only current Brazilian supplier of coffee, selling them 200,000 bags of green coffee a year.

(For some inexplicable reason it's suddenly sweater-wearing weather again here in Seattle today, and so maybe that is why I keep finding myself surfing South American websites.)