Who’s winning, losing from coffee’s drop to a 13-year low
Coffee has been among the worst-performing commodities in the past few years as the world became awash with beans, and there are few signs of a meaningful rebound any time soon.
With arabica languishing near a 13-year low and robusta futures also performing poorly, there are concerns that the industry’s stability is under threat. Here’s a look at who’s winning and losing from the rout, from speculators to coffee-shop customers.
Roasters: The slump means roasters such as the makers of the Maxwell House and Folgers brands, Kraft Heinz Co. and JM Smucker Co., are paying less for their beans. That could benefit margins at companies such as Smucker, whose shares have climbed to an one-year high.
Consumers: Coffee-shop drinkers are actually paying more for a cup now than they were in 2011 — an espresso at Starbucks Corp.’s U.K. stores has risen about 20%.
Money managers: Speculators have been betting on declines in arabica since August 2017, and the wager has paid off for those who stuck with it, with prices slumping about 30 percent since then.
Farmers: Like every industry, low prices are bad news for producers. In some coffee-growing countries, the market price of arabica is below the cost of production, and it’s hard for farmers to suddenly switch to other crops. That’s because coffee trees last several years once planted.