Coffee set to get cheaper in 2014
There's an oversupply of beans globally, which might lead to further price slides. But java purveyors aren't keen to give up any profits.
What will 2014 mean for the price of your daily cup (or two) of coffee?
If you purchase that morning beverage or afternoon pick-up from your local barista, you probably won't see much of a change.
But a continuing oversupply of coffee on a global scale probably means supermarket and wholesale prices will continue to drop.
The Wall Street Journal reports coffee prices fell 20 percent in 2013, down 49 percent since 2011.
A recent U.S. Department of Agriculture report, meanwhile, notes stockpiles are expected to rise in many coffee-producing countries, particularly in Brazil and Vietnam, while the demand from coffee-consuming countries remains "relatively flat."
And although an outbreak of "coffee rust" plant disease in Mexico and Central America is forecast to significantly reduce production in that region, any local decline, according to USDA, will be more than offset by coffee production elsewhere.
There are also concerns that coffee production will continue to rise this year.
"I don't think we've seen the absolute low for prices," Sterling Smith, a futures specialist at Citigroup, told The Journal. "There is a strong possibility that we will see record production in a new crop of coffee."
As previously reported on Benzinga, coffee over-production has been a boon to consumers of the high-end arabica beans that end up in the beverages java-drinkers purchase at chains like Starbucks (SBUX), Dunkin Donuts (DNKN) or Tim Hortons (THI).
And, of course, a lower commodity price plus unchanged prices on the menu means a windfall for the coffeehouse chains -- if they decide to not pass those savings on to their customers.
"The raw commodity, which is coffee, is going down. So your costs are going down, your revenues are staying about the same, which means your profitability is gonna go up," Duke University business professor Campbell Harvey recently explained on the American Public Media radio program, Marketplace.
Industry observers, meanwhile, are keeping a close watch on Brazil, the world's largest coffee producer, which could have another bumper crop in 2014 -- and which, in turn, could keep coffee prices sliding south.
More from Benzinga
this will yield higher profits to the coffee houses (starbucks, et al) who no doubt will not lower their retail prices.
likewise the grocery stores will be slow to drop their retail prices.
they all learned from the oil industry. fast up on prices, slow to drop. if at all.
Two things I like to drink besides water...
Coffee and Whiskey; Occasionally I mix them....Woooohooooo !!!
I doubt the change in coffee prices will affect us much. I drink the generic stuff or whatever is on sale. Dollar General sells a pretty good generic coffee - so does Wal-Mart and Costco. As long as it's brewed, full of caffeine and strong as hell, I don't care.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
The idea of US crude being a shelter from turmoil abroad may not be as far fetched as it seems.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.