(Bloomberg) – Coffee rosters that were betting at low prices, exiting hedging. Now consumers will pay the price.
Companies who usually take positions to protect themselves from the price rapid raise in the Futures Market, when prices began to increase last year, they can bet that they can secure the better deal later. But the lack of supply remained and prices continued to rise, from JDE Pete NV to Starbucks Corp, no option for consumers except to increase the cost for consumers.
Now, a proxy for buyer hedging is near the lowest level in more than 11 years and Roasters are expected to pass their high costs on consumers who are already paying the most for coffee. According to the US Bureau of Labor Statistics, the average price for a pound ground roast coffee reached $ 7.25 per pound in February.
“Reality is an important value growth,” said Rafael Olivera, Chief Executive Officer of NV, Coffee Titan JDE Pete, said in February earnings call. Starbucks chief financial officer Rachel Raggi said in January that the products of the company sold in the supermarket would be “more meaningful” in a more meaningful way than other areas of their business. The two officials said they expect high prices for retail sales pressure.
Coffee prices increased in a record earlier this year after a drought injury in top manufacturer Brazil. Shortage means that the market was flipped into a so -called backwardness, in which the pre -dated contracts were more expensive than later. As a result, holding the beans in the inventory has become very expensive and the rosters are operating “mouth to hands” – buying raw beans in very small batches and entering the market in the previous possible moment. Cash-stapped traders are also struggling to finance the transport of beans from where they produce where they consume.
“Rosters are struggling,” said Thiago Kazarini, a broker located in the Brazilian’s largest coffee-ugane area. “Some of them are probably working below the cost of raw materials at this moment, of the entire operation.”
Meanwhile, small, futures continue to stay away from the futures market than mid-size roosters.
Gregris coffee, a New York -based company, which was a company with more than 50 places across the US, was used to use futures to lock prices for almost all coffee. But now, looking at the market structure and high prices, “Most people who are in our shape are not seeing a big opportunity to hedge them,” said CEO Gregory Zamfotis.
Tomas Arujo, a trading associate at the Stonex Group Inc., said Rosters are waiting for the market to reduce a leg before putting on a new hedge. “The issue is, I am not really sure if we are going there.”
-With help from Deniella Cartori.
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