Your Soft Commodities Price Updates as of July 11, 2017 PART 1 OF 5
On July 11, 2017, coffee prices were broadly positive for both the Arabica variety traded in the United States and the Robusta variety traded in London. While the weekly movements in prices were positive for both varieties of coffee, the Arabica variety continues to trade lower than levels in the corresponding week of 2016.
On July 11, Arabica coffee prices for near-month futures, expiring on July 19, rose 2.1% week-over-week to $1.25 per pound. Similarly, Robusta coffee prices for the near-month coffee futures, expiring on July 31, rose 1.9% to $2,118 per metric ton, from $2,079 per metric ton a week ago. Year-over-year, Robusta coffee has risen 21.0% compared to the same week a year ago, while Arabica coffee prices are 11.0% lower and lagging behind.
The difference between these two coffee types is quality and flavor, and Arabica is considered higher quality and better flavor.
In the above graph, we see a comparison of the forward curves of Arabica and Robusta coffee varieties from a week ago to determine how the market sentiment shaped up over the week.
The forward curve of Arabica futures, expiring on July 19, rose slightly to $1.25 per pound. But for most of the future maturities, futures prices have fallen compared to last week.
Similarly, the near-month futures for Robusta fell to $2,116 per metric ton, from $2,167 per metric ton a week ago. For all maturities for Robusta coffee, the forward curve has shifted lower than last week.
Coffee retailers (JO) such as Starbucks (SBUX), Dunkin’ Brands (DNKN), McDonald’s (MCD), and Keurig Green Mountain (GMCR) closely track the forward curve to hedge their exposures in the futures market.
In the following parts of this series, we’ll cover other soft commodities such as sugar, cocoa, orange juice, and cotton.
Next, let’s take a look at the price movements for sugar commodities.