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Coffee prices to fall further

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.

To book, or not to book? We say no to coffee and yes to soy oil.

Coffee prices tumbled to four-year lows of $1.16 per pound on Aug. 1. Then, the Brazilian government stepped in to buy surplus coffee from growers and helped push prices back to $1.23 per pound. But the Brazilians won’t be able to keep their finger in the dike for long. Fundamentals remain bearish for prices, with global surpluses projected for both 2012–2013 and 2013–2014. Coffee prices are headed lower, barring a major weather event.

After averaging $0.50 per pound for the first half of 2013, soybean oil futures have plunged to $0.41 per pound. Ample soybean availability for U.S. crushers and record global palm oil output have pressured U.S. prices lower. Looking forward, biodiesel usage could lead to higher soybean oil prices at some point in the fourth quarter. So look for a fall market bottom in the $0.36–$0.39 range and book all of 2014 if you can.

Contact John T. Barone at [email protected].

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