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The Markets Develop a Caffeine Habit
Since my last piece on coffee two months ago (click here), the ETF for aromatic commodity (JO) has tacked on 23%, and 42% since I put out my watershed call (click here for “Going Back Into the Ags”).
But this may just me the down payment. Weather in primary producer, Latin America, has been poor. US coffee stockpiles are now at 10 year lows. Major producer Vietnam is threatening to cease exports and start hoarding, as Russia has already done with wheat. Although prices are now at 13 year highs, we may get even more of a jolt out of this trade.
Has anyone through about shorting Starbucks (SBUX) on this news? They can’t keep passing prices on to consumers forever in this deflationary world. What is the one agricultural commodity that has gone down this summer? Ironically, it is cocoa, where a single hedge fund attempted to corner and create a short squeeze, unsuccessfully, it would appear (click here for “Hedge Fund Corners the Cocoa Market”). Better start stocking up on those 50 pound bags of coffee beans at Costco.
To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.
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Commercials are long coffee, everyone else short, it's time to get long again surely?!??!
Been stocking wheat, corn, soybeans, lentls and my own personal favorite "vichyssoise" in response myself. Viva la revolucion! Yesterday I thought about "putting a bid in for a locomotive" but decided "the transporation cost was a little high" for "moving it into the front yard." Insofar as the neighbors were concerned...hahahahahaha.
The Assholeicle of Omaha can probably get you a deal. Run it thru FHA as a mobile home, 30 yr mortgage, then stop paying. They won't show for foreclosure till way after the collapse.
I believe the correct term is "anacle".
Been stockpiling coffee (long shelf life in mylar shrink wrap) for two years. Coffee is right behind PMs and ammo.
Shorting starbux is the same as shorting apple.
Aren't you really speculating on when the last pieces of the dream are given up?
Bought all of the sale cans at Walmart yesterday.
Hate to say it, the cotton call seems to have been more than accurate.
Sorry i beat you up on that one and didnt listen.
I worked for SBUX for a couple years. There's a big structural problem with that business which is going to become increasingly important in the upcoming decade.
The folks who work there can't afford the products.
Starbucks?! Right. Haven't given them a second thought since I was in Vancouver. There were 3 of them on the 4 corners of a downtown intersection. No kidding. I discounted the company right then and there. Coffee I do drink, but not theirs. The big bag o' beans sounds like a good idea, but not in the light of any Starbucks scenario. Thank you for posting (kinda in the same sentiment of "Thank you for sharing.").
so how is your Tim Horton's doing then? Don't they have a relationship with Wendy's//Arbys, too?
Sorry, I accidentally junked you when meaning to hit the reply tag - my apologies. Timmie's was spun off by Wendy's, and is now independent again and still expanding, though they raised their prices a bit a few months ago. But there are noticeably fewer Starbucks around here these days, even Toronto took a fair hit.
Never heard of it/them. I'm not Canadian, was just passin' thru on the way to Alaska.
I got un-junked -- thank you.
The problem with 'shorting' SBUX is that coffee (or flour, or really, any non-labour, non-rent input) costs mean practically nothing to the margins of such a business. There can't be more than ten cents worth of actual raw coffee in a $5 latte. A doubling in coffee prices is negligible in terms of the savings SBUX can (and is) achieving in its other major inputs, to wit: rent, labour, and financing, due to the recession and associated deflation.
SBUX will rise, or fall, not based on commodity prices, but rather, on whether people want to continue to consume their expensive product. Shorting on that basis may make sense, but you're doing yourself a massive disservice by focussing on such a narrow part of the overall business inputs.
Oh, there you go again with the fundamentals... You silly boy!
Those won't matter until the system collapses to the point where the co-located NYSE servers are running off backup generators because the power grid has deteriorated beyond the ability to provide stable power to them...
I have gone by that place its "unique" to say the least ,its
very, very hardened so to speak.
.. hmmmmmm... as SRGT. SHULTZ
from Hogans Heros used to say... "I KNOW NOTHINK"
MY LIPS R SEALED
are you arguing that it is negligible to the producer however?