Coming Supply Burden Brings Opportunities in Coffee

By James Cordier and Michael Gross
11 Nov 2006 at 10:59 AM EST

TAMPA, Fla. (ResourceInvestor.com) -- Investors reading an investment article on a stock or commodity typically expect one question to be answered at the end of the piece: Is it going up or is it going down?

Sellers of options, however, learn that the world of the market is not that simple. An outlook such as “I am not sure if it is going up or down in the short term, however, there is a very high probability it will not go to this level” may seem pointless to some investors. But this type of scenario is exactly the kind of opportunity that gets option writers rubbing their hands together. Option sellers don’t care where prices are going. They only care where prices are not going.

This brings us to the coffee market. The NYBOT coffee contract has experienced a healthy price rally over the last 3 weeks. From October 23 through the close on

November 9, coffee prices increased by 18.3 cents per pound (18%) to close over $1.19 per pound. The market rallied primarily on a handful of fundamental issues occurring at the same time:

1.The coffee flowering period took place in Brazil during October and the general consensus is that it did not go as well as expected. The flowering period is a critical time of year for coffee plants. Healthy flowers form on the coffee bush, which then drop off, leaving a red “cherry” that eventually turns into a green coffee bean. The more and healthier the flowers, the higher the quantity and quality of bean the bush will produce the following year. This year’s flowering period saw less than ideal weather conditions, meaning not as many flowers as was generally expected. In combination with an already expected “off” year in coffee production next year, next year’s Brazilian crop could produce 25% less coffee than this year.

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What’s in a name? Plenty, Ethiopia tells Starbucks

By Brenda Ryan
Published Nov 9, 2006 8:02 PM

How does the “free trade” pushed by U.S. corporations really work?

Ethiopian coffee farmers don’t make enough in one whole day to buy a latte at Starbucks. But the Ethiopian government has a plan to change that. It’s seeking trademarks on Ethiopia’s famous coffee names in hopes of getting a larger share of their retail price. The charity group Oxfam estimates that the trademarks could bring the Ethiopian coffee industry and farmers an additional $88 million per year.

Starbucks, though, is standing in the way.

Last year the Ethiopian government filed applications with the U.S. Patent and Trademark Office to trademark the Sidamo, Harar and Yirgacheffe coffee names. While Ethiopia received a trademark for Yirgacheffe in August, the National Coffee Association and Starbucks are opposing registration of the other two names.

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Oaxaca coffee exports unaffected by protests

Source: Reuters

OAXACA, Mexico, Nov 9 (Reuters) - A violent political crisis in the Mexican coffee-growing state of Oaxaca, which has seen protesters hijacking cars and trucks, does not threaten bean exports, the state coffee council said.

The council said output was set to rise this harvest.

Large parts of Oaxaca's pretty capital of the same name were seized months ago by protesters who built street barricades, chased out police and closed government buildings in a bid to oust the state governor.

Federal police have since gained control of the city's colonial center, but protesters still dominate some neighborhoods and frequently hijack trucks and buses to strengthen their roadblocks.

Coffee council head Fortino Figueroa said the harvest beginning in the next few weeks would not be affected by the crisis, which has seen at least a dozen people killed, most of them protesters.

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Starbucks version of holiday ads start

By Melissa Allison

Seattle Times business reporter

Ready or not, Starbucks will begin spreading holiday cheer today with Christmas décor, holiday coffee drinks and freebies galore.

The world's largest coffee-shop chain will hand out subway passes to people in New York and spring for free cab rides in Boston and San Francisco.

It will buy people spins around the holiday carousel at Seattle Center and buy out entire theaters for plays, so that anyone going to buy a ticket will be told that Starbucks has it covered.

In Portland, Denver and Washington, D.C., Starbucks will launch its third annual round of "coffee on cars," in which cab drivers and others drive around with a Starbucks coffee cup on their car roofs until someone stops to tell them. The Good Samaritan gets a free cuppa.

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Can caffeine protect against Alzheimer's?

By Kathleen Fackelmann, USA TODAY

Connie Lesko's not looking for the jolt that a cup of hot java offers.

Instead, she's hoping new research that shows caffeine may protect against Alzheimer's pans out: The 56-year-old from Wimauma, Fla., has two parents with this incurable disease.

"I've never been much of a coffee drinker," she says. "But now I'm thinking — what the heck — I'll have a cup."

Lesko and others are betting on research suggesting that caffeine will offer protection not just against Alzheimer's, but also against Parkinson's. Together these degenerative brain diseases affect about 6 million people in the USA. Cases of both diseases are expected to explode in the next few decades.

"Boomers are coming of age, and large numbers of them will develop neurodegenerative diseases," says Zaven Khachaturian, president and CEO of the Lou Ruvo Brain Institute in Las Vegas and the former director of the Alzheimer's unit at the National Institute on Aging.

The coming epidemic has fueled a search for drugs and other interventions that might slow the onset of these diseases, he says. If research by Gary Arendash and others holds up, boomers might be able to get some protection simply by enjoying an espresso.

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How smart do you have to be to order a cup of coffee?

By Melissa Allison
Seattle Times business reporter

Whenever Seattle becomes intimidated by East Coast sophistication, all it has to do is click its heels three times and think of coffee. It's one subject about which Seattle is secure to the point of smugness. We know our cappuccino from our latte.

Even Massachusetts-based Dunkin' Donuts appears threatened by Seattle-style coffee culture. "My mouth can't form these words," a befuddled chorus of coffee drinkers sings in a new TV commercial for the coffee and doughnut chain, which has no stores in Washington. "Is it French or is it Italian? Perhaps Fritalian."

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Starbucks defends business with poor farmers

NEW YORK, Nov 5 (Reuters) - Starbucks (SBUX.O: Quote, Profile, Research), the icon of U.S. coffee culture, strongly defended on Sunday its business practices with poor coffee farmers around the world after it was accused of blocking the U.S. trademark application of coffee growers from Ethiopia.

Starbucks said in a full page ad published Sunday in the New York Times that it has worked to strengthen infrastructure of coffee farms in many parts of the world.

"We do these things -- in Ethiopia, in Guatemala, in Indonesia, and other coffee growing communities around the globe -- not just because it's the right way to work but because it's the smart way to work," the ad said.

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Think about it

from Refdesk.com

"Losers spend time explaining why they lost. Losers spend their lives thinking about what they're going to do. They rarely enjoy doing what they're doing."
- Dr. Eric Berne