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.
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Two things can significantly move coffee prices — freeze or drought — and we are now in the throes of a full-blown weather market. Dry conditions in Brazil are adversely affecting the coffee crop, a critical time when the cherries are budding. Rainfall in Minas Gerais, Brazil’s top-producing state, was 60 percent below normal in January.
Coffee futures have now jumped from a seven-year low of $1.0150 per pound in November to a high of $1.3570 on Feb. 7. Some private forecasters had previously predicted Brazil's harvest could be a record-high 60 million (60-kilo) bags. The USDA pegs it at 53 million bags; Brazil’s government is calling for 46.5-50.2 million bags.
While some yield reduction is expected, February rain can still mitigate damage. But, even given the drought, world coffee supplies are still expected to exceed demand through 2014 and 2015 and to keep a cap on prices.
Contact John T. Barone at [email protected].
