How Soft Commodity Prices Trended Last Week

In the week ending June 30, Arabica and Robusta coffee prices rose week-over-week. The Robusta variety is considered of lower quality and flavor in comparison to the Arabica variety. Let’s look at last week’s price momentum in more detail.

On June 30, 2017, the Arabica futures expiring on July 19 rose as much as 4% to $1.25 per pound from $1.2 per pound on June 23. For the week ending June 30, the average Arabica coffee near-month futures expiring on July 19, 2017, rose 3.2% week-over-week to $1.23 per pound from $1.19 per pound. Similarly, the average Robusta coffee near-month futures expiring on July 31, 2017, rose 2.2% to $2,099 per metric ton.

Similarly, the Robusta coffee near-month futures expiring on July 31 rose 4.3% to $2,156 per metric ton on June 30 from $2,016 per metric ton on June 23. The average Robusta coffee near-month futures expiring on July 31, 2017, rose 2.2% to $2,099 per metric ton. Let’s now look at how the forward curve for both the Arabica and Robusta futures changed week-over-week. Year-over-year, the Arabica coffee futures are trading 13% lower while the Robusta coffee futures are trading 28% higher.

In the above chart, we see that the forward curve for the week ending June 30 for all maturities of Arabica and Robusta futures shifted upwards. This is important for companies (JO) such as Starbucks (SBUX), Dunkin’ Brands (DNKN), Green Mountain Coffee (GMCR), and McDonald’s (MCD), which may hedge their positions to mitigate the negative impact of rising coffee prices.

Next, we’ll discuss sugar commodities’ price movements.