After a sharp drop in coffee prices, there are those who believe that this is an opportunity

Arabica coffee beans reached the price of 1.6 dollars per pound this week – a decrease of almost 40% since the beginning of September. The sharp drop in prices is mainly linked to the collapse of the Vietnamese currency and a better than expected harvest in Brazil. According to Carlos Marra of Rabobank “September is usually when the wet season starts, and the start of this season has been very good.” According to estimates, in certain parts of Brazil this year’s growth may be one of the best in recent years. The production amount of Brazil’s Arabica beans reached the level of 41.5 million bags of 60 kilo beans, compared to 36.4 million in the previous season.

The second factor that affected the drop in coffee prices was the collapse of the Vietnamese currency. The Vietnamese currency is greatly affected (like many currencies in the world) by the US central bank’s interest rate hikes, as each hike weakens the local currency. The Fed’s sharp hikes led the Vietnamese coffee growers to sell their coffee stocks in much larger volumes than usual and at a high speed – They wanted to sell as much coffee as possible and get as many dollars as possible before the strength of their local currency weakened further. Jake Hanley, a strategist at Teucrium, said that “the strengthening of the dollar is an incentive for farmers to sell their crops – they look at the beans in the bags as unconverted dollars.”

Hanley estimates that the drop in coffee prices does not reflect reality. The strategist believes that the market has not yet been really flooded with coffee and that coffee supplies will return to their normal levels within about a year. Hanley points out another thing that could indicate a future price increase is that coffee prices in Brazil, which are paid in cash, are higher than the futures indicate.

Sean Hackett, president of Hackett Financial Advisors, believes that “the panic phase is over and we are about to enter a significant bear market rally. This is the desmant to go against the movement of the market”, when he points out that the coffee bear market is not over yet. Prices are estimated to rise back up to around $2 And apart from trading in futures contracts, in order to be exposed to the coffee, you can check the certificate


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, which tracks coffee prices. It should be noted that this is not an ordinary ETF, as it is actually an ETF that exposes investors to the credit risk of its issuer.

Coffee prices are indeed falling, but the situation for consumers is not the same and


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shows us exactly why. The company reported that it raised coffee prices by about 6% in the past year and according to the US Bureau of Statistics, coffee prices in convenience stores and supermarkets increased by 14.8% per year (as of October). In the company’s latest reports, Starbucks beat forecasts and presented revenues of 8.41 billion dollars with earnings of $0.81 per share, analysts’ expectations were for revenues of $8.31 billion and earnings per share of $0.71.

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