In this weekly Commodities Watch column, John T. Barone, president and commodities analyst for Market Vision Inc., offers a snapshot of the state of commodities for restaurants.
As the year winds down, two commodities should be watched closely as potential long-term contracting opportunities. The first is coffee. Brazil got enough rain to avert most drought-related damage, ensuring a record large crop. Coffee futures plummeted from highs of $1.83 on Oct. 3, to just under $1.40 last week, and closed at $1.42 on Nov. 30. Forward contracts for 2013 are trading in the $1.50s. This market is at or near bottom. Coffee coverage is recommended at least until May/June — or for all of 2013.
Soy oil also bears close watching. Futures plunged from highs of $.55 in late September to $.47 in mid November and have risen back up to $.49, supported by a jump in export sales. But palm oil prices remain cheap, and a big South American crop is coming in April. So, again, coverage is recommended through at least spring or all of 2013.
Contact John T. Barone at [email protected].
