Coffee prices surged to 26-month highs on Tuesday after a top coffee merchant lowered its forecast for Brazil's crop.
Volcafe Ltd., a unit of commodities trading house ED&F Man Holdings Ltd., said it expects Brazil to produce 45.5 million 60-kilogram bags of coffee this year, down 11% from its January estimate. Volcafe changed its forecast after surveying fields in Brazil, the world's top grower and exporter of coffee beans.
"The one thing that is going to get us going right now is numbers on paper," said Hector Galvan, senior market strategist at RJO Futures in Chicago. "The [speculative] trade is going hog-wild over coffee right now."
********* Volcafe said it expects global demand for coffee to exceed supplies by 11 million bags in the crop year beginning in May and another supply shortage next year as well. *********
I really don't have a feel yet for how it will perform. They had a really excellent quarter last time despite low coffee prices but there are some factors that make it impossible to predict next earnings. First, their hedging program could be a big gain. Second, coffee prices are all over the place and are now $2.10 where they were $1.20 after last earnings. Third, some of their larger customers like GMCR keep a good supply of coffee on hand so they may not be buyers at the higher prices......but they will have to buy eventually.
JVA's earnings usually jump wildly from quarter to quarter. If they can bang out $0.30 eps or higher next quarter and attribute it to higher coffee prices, this could go parabolic. It might go parabolic anyway.
That is usually the pattern. We should see some more interest as we approach June. Might have some small runs in next couple of weeks and I think will hit $8.25 in late May in anticipation of June. I have a great feeling going into next earnings call. $11 - $12 is not unrealistic