{"id":184628,"date":"2023-01-31T11:00:00","date_gmt":"2023-01-31T16:00:00","guid":{"rendered":"https:\/\/ibkrcampus.com\/?p=184628"},"modified":"2023-04-25T20:28:18","modified_gmt":"2023-04-26T00:28:18","slug":"time-for-a-coffee-break","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/podcasts\/ibkr-podcasts\/time-for-a-coffee-break\/","title":{"rendered":"Time for a Coffee Break?"},"content":{"rendered":"\n<p>Find out what\u2019s brewing in the coffee futures market with Sean McGovern, vice president of research at McAlinden Research Partners. We cover everything from Brazil\u2019s weather to international trade to the Fed\u2019s monetary policy to China\u2019s Zero-COVID policies and more. We also take a deep dive into consumer spending patterns with IBKR\u2019s human resources director Michael Kerrigan and senior trading education specialist Jeff Praissman. Where are coffee prices headed? What could the commodity say about Starbucks\u2019 and KDP\u2019s upcoming earnings? What\u2019s happened to the quality of diner coffee? And who would switch to a coffee that\u2019s not made from \u2026 coffee? All this and more!&nbsp;&nbsp;<\/p>\n\n\n\n<p><strong>Note<em>:<\/em><\/strong><em>&nbsp;Any performance figures mentioned in this podcast are as of the date of recording (January 26, 2023).<\/em><\/p>\n\n\n\n<iframe title=\"Time for a Coffee Break?\" allowtransparency=\"true\" height=\"150\" width=\"100%\" style=\"border: none; min-width: min(100%, 430px);\" scrolling=\"no\" data-name=\"pb-iframe-player\" src=\"https:\/\/www.podbean.com\/player-v2\/?i=c4zi6-137ac02-pb&amp;from=pb6admin&amp;share=1&amp;download=1&amp;rtl=0&amp;fonts=Arial&amp;skin=1b1b1b&amp;font-color=ffffff&amp;logo_link=episode_page&amp;btn-skin=c73a3a\"><\/iframe>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-summary-ibkr-podcasts-ep-59\">Summary \u2013 IBKR Podcasts Ep. 59<\/h2>\n\n\n\n<p><em>The following is a summary of a live audio recording and may contain errors in spelling or grammar. Although IBKR has edited for clarity no material changes have been made<\/em>.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Steven Levine<\/strong><\/h3>\n\n\n\n<p>Hello, and welcome to IBKR Podcasts. I&#8217;m Steven Levine, senior market analyst at Interactive Brokers and your host for today&#8217;s program. We&#8217;ll be speaking with Sean McGovern, vice president of research at <a href=\"https:\/\/www.mcalindenresearchpartners.com\/about-mrp\/?gclid=Cj0KCQiAic6eBhCoARIsANlox855rTJsC-LJ6zxBdUowaspfCIgGyCS4a6cURt0miazzI51jy1Aq20gaAmihEALw_wcB#our-process\">McAlinden Research Partners<\/a>, about the current state of coffee futures \u2013 it\u2019s part of our series on agricultural commodities and what you might expect your next breakfast bill could amount to. Speaking of which, we&#8217;re joined here by Michael Kerrigan, our human resources director at IBKR. Also, Jeff Praissman, our senior trading education specialist\u2026. And they&#8217;re going to talk about some of their experiences on the ground, so to speak, in terms of their spending on coffee.<\/p>\n\n\n\n<p>So, Sean, Michael, Jeff \u2026 it\u2019s like a party. Welcome!<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Jeff Praissman<\/strong><\/h3>\n\n\n\n<p>Thanks for having me.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Sean McGovern<\/strong><\/h3>\n\n\n\n<p>Great to be here \u2013 coffee in hand, actually.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Steven Levine<\/strong><\/h3>\n\n\n\n<p>Me too, actually. Not a good idea for me, but it&#8217;s there. Okay, so, today we&#8217;re going to talk about coffee. It&#8217;s one of the staples in many people&#8217;s morning routines. I think <a href=\"https:\/\/www.songlyrics.com\/dolly-parton\/9-to-5-lyrics\/\">Dolly Parton called it a \u2018cup of ambition\u2019<\/a>, didn&#8217;t she? \u2026in the title song from the movie <em>9 to 5<\/em>. At least in many parts of the U.S., it typically sits alongside other agricultural commodities like sugar, wheat, lean hogs for bacon, frozen concentrated orange juice \u2026 to name just a few. And there are some consumer staples [and] consumer discretionary companies like <a href=\"https:\/\/investor.starbucks.com\/press-releases\/financial-releases\/press-release-details\/2023\/Starbucks-Announces-Q1-Fiscal-Year-2023-Results-Conference-Call\/default.aspx\">Starbucks<\/a> or <a href=\"https:\/\/investors.keurigdrpepper.com\/\">Keurig Doctor Pepper<\/a> \u2026 they&#8217;ve got earnings coming up \u2026 so, maybe we can get a glimpse into what these firms might serve up.<\/p>\n\n\n\n<p>Great to have all your perspectives here. [We\u2019re] going to get some insights into what coffee futures prices are doing and what they&#8217;re pointing to and why, as well as what some of us are paying for coffee at our local retailer, which just might be our own kitchen here at work.&nbsp;<\/p>\n\n\n\n<p>You all drink coffee. Let&#8217;s just talk about your first cup of the day. What&#8217;s your brand of choice? Is it big? Is it small? How much do you pay for it? We&#8217;ll start with start with Jeff. Jeff\u2026.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Jeff Praissman<\/strong><\/h3>\n\n\n\n<p>I usually have actually one cup of coffee a day, usually around 10:30-11:00 [AM]. It kind of varies depending on where I&#8217;m at, so if I&#8217;m at the office, I&#8217;ll prefer <a href=\"https:\/\/www.dunkinathome.com\/products\/kcup-pods\/hazelnut\">Dunkin&#8217; Donuts\u2019 Hazelnut<\/a> out of the Keurig there. If I&#8217;m working from home, I usually pop open a <a href=\"https:\/\/www.coffeeintouch.com\/kirkland-cold-brew-coffee\/\">Costco Kirkland Brand Cold Brew<\/a> Iced coffee. And if it&#8217;s during the week, and I&#8217;m running errands, I usually grab a Dunkin&#8217; Donuts or a Starbucks iced coffee, while I&#8217;m out running errands with the kids. In fact, I actually usually see Mike [Michael Kerrigan] at my local Starbucks. As far as costs, I would say I think they definitely have gone up. The Starbucks and Dunkin&#8217; Donuts, I would say have probably gone up like $0.60 a cup, I would think, from the year before.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Steven Levine<\/strong><\/h3>\n\n\n\n<p>$0.60 a cup, you think it&#8217;s gone up? Since last year?<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Jeff Praissman<\/strong><\/h3>\n\n\n\n<p>I think so. I usually go with the large or extra-large iced coffee.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Steven Levine<\/strong><\/h3>\n\n\n\n<p>What is it now? Do you mind telling us what you pay for it now?<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Jeff Praissman<\/strong><\/h3>\n\n\n\n<p>I&#8217;m going to say around $5.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Steven Levine<\/strong><\/h3>\n\n\n\n<p>$5 for a cup of coffee. Wow.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Jeff Praissman<\/strong><\/h3>\n\n\n\n<p>Probably $4.50-$5.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Steven Levine<\/strong><\/h3>\n\n\n\n<p>What&#8217;s that brand again?<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Jeff Praissman<\/strong><\/h3>\n\n\n\n<p>Either Dunkin&#8217; Donuts or Starbucks. The Kirkland&#8217;s probably about $1.60 a can, and I actually discovered it during the pandemic when I was working from home. And it&#8217;s pretty good, and it&#8217;s a pretty good deal.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Steven Levine<\/strong><\/h3>\n\n\n\n<p>Alright, we&#8217;ll go to you, Michael. Michael, what&#8217;s your brand of choice? First couple of the day. Big? Small? How much do you pay?<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Michael Kerrigan<\/strong><\/h3>\n\n\n\n<p>Coffee has become a staple of my diet, especially in the morning. I\u2019m an avid coffee drinker. I probably switched over from tea when I moved from Ireland to come over here. So, I&#8217;ve kind of progressed in my coffee taste, but I do drink plenty of coffee. I probably have close to two to three\u2026four cups a day, depending on the day. I typically go for a medium and not a large or small. So, through a loop there. Brands of choice \u2026 I&#8217;m not picky. I tend to lean toward more of the dark roast, so any kind of brand of the dark roast. Although at home my staples are <a href=\"https:\/\/www.peets.com\/\">Peet&#8217;s<\/a> and <a href=\"https:\/\/www.eightoclock.com\/\">Eight O&#8217;Clock<\/a> \u2026 are usually my brands \u2026 and I kind of avoid the Keurig when I&#8217;m at home, although I use it here in the office. And actually Starbucks\u2019 version is what I use in the office. If you want to jump in the costwise, I think that&#8217;s probably why I drink more coffee at home. It became a very expensive habit for my family, because they all drink <a href=\"https:\/\/app.starbucks.com\/menu\">some version of Starbucks<\/a> coffee \u2013 whether it&#8217;s those crazy little drinks that include some caffeine, or whether it includes a coffee. Mine is not as expensive as Jeff&#8217;s here. Mine was typically around $3, because I just get a plain coffee and just a little milk, but my wife drinks one of those long-named coffee drinks from Starbucks that I can&#8217;t repeat, so it takes literally 12 different directions to make. And I&#8217;ve seen that go up almost probably close to $1.50, which would typically for a venti, she would probably pay close to $5 probably last year, but I think the last time I went, I think it was pretty close to like $6.75. The same drink.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Steven Levine<\/strong><\/h3>\n\n\n\n<p>$6.75. Wow. I know Starbucks, I think, <a href=\"https:\/\/www.fool.com\/earnings\/call-transcripts\/2022\/11\/04\/starbucks-sbux-q4-2022-earnings-call-transcript\/\">mentioned in their earnings<\/a> at some point last year or late last year, I think maybe around November, that they were <a href=\"https:\/\/www.cnn.com\/2022\/11\/16\/business\/coffee-prices\/index.html#:~:text=Coffee%20has%20been%20getting%20more,this%20year%20by%20about%206%25.\">raising prices<\/a> by about 6%. I believe it was something like that.<\/p>\n\n\n\n<p>Sean, [do] you want to share your habits with coffee and what you drink, what your brand of choice is, say for the morning?<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Sean McGovern<\/strong><\/h3>\n\n\n\n<p>I jump around a little bit. Sometimes I&#8217;m in the mood for a drip coffee, but sometimes I&#8217;m a little bit more higher-end in my choices, and I like a good <a href=\"https:\/\/www.nespresso.com\/us\/en\/vertuo-coffee-pods\">Nespresso<\/a>. I&#8217;ve been doing that for a couple of years. I got one of those sort of <a href=\"https:\/\/www.nespresso.com\/us\/en\/vertuo-coffee-machines\">Nespresso coffee makers<\/a> as a gift a couple of years ago, and I&#8217;ll tell you it&#8217;s good. It&#8217;s good, and it&#8217;s a bit addictive. So, the prices have really gone up. I mean, I think a sleeve of\u2014 They have like these <a href=\"https:\/\/www.nespresso.com\/us\/en\/circularity\">aluminum pods<\/a>, and I think the aluminum might actually be what&#8217;s driving up the price so much. They&#8217;re recyclable. Definitely gone up at least $10 to $20 for a sleeve. So, really significant price increases there, but I keep paying it, so\u2026.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Steven Levine<\/strong><\/h3>\n\n\n\n<p>It is addictive. I mean, it sounds like prices are going up all \u2018round. It&#8217;s interesting for me. I mean, I read somewhere that a good <a href=\"https:\/\/www.healthline.com\/nutrition\/mediterranean-diet-meal-plan#eating-out\">Mediterranean diet<\/a>, which I decided to look into \u2026 and there was some site [where] somebody had said that within the Mediterranean diet, all you should really drink is coffee or water. And, so, that&#8217;s all I&#8217;ve been following. For the past almost year, it&#8217;s all I&#8217;ve been drinking is coffee and water, and I guess coffee is a good deal water already. So, I can tell you I wake up at about 4:30 in the morning, every morning. I drink instant. That&#8217;s probably not such a connoisseur\u2019s coffee of choice, but it is instant. <a href=\"https:\/\/www.enjoybettercoffee.com\/Jacobs-Coffee-s\/1.htm\">It&#8217;s called Jacobs<\/a>. It&#8217;s German, I think. I get it at my local organic market. It&#8217;s a 7-ounce bottle [that] costs me about $11.00, which I suppose makes about twenty 15-ounce cups of coffee or something like that. It translates to about $1.36 a cup. I did the math on this. And it&#8217;s not bad, right? $1.36 a cup in the morning. I don&#8217;t know. I mean, this is what I&#8217;d like to find out. I&#8217;d like to find out if what we&#8217;re paying for coffee is reasonable, and Sean, I&#8217;m looking to you for these insights. So, I guess the first thing is, is it reasonable? Do you think that any of us should be spending what we&#8217;re spending on coffee? And the second thing is, where are futures headed?<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>The Perks of Splurging<\/strong><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Sean McGovern<\/strong><\/h3>\n\n\n\n<p>I&#8217;m actually really glad you asked this question, because I think the most clich\u00e9 advice I&#8217;ve heard about saving money is: \u2018If you want to save money, stop buying the fancy latte, stop buying the Starbucks, Dunkin\u2019, whichever of those.\u2019<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Steven Levine<\/strong><\/h3>\n\n\n\n<p>You hear that, Michael? Jeff?<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Sean McGovern<\/strong><\/h3>\n\n\n\n<p>You want to build savings &#8211; some people really pretend that that&#8217;s going to be a huge game changer, and to some extent you will save more money. It&#8217;s true, right? But to me, there&#8217;s a bit of behavioral economics at play there. Coffee is obviously an important part of our day. We get something out of it. If we didn&#8217;t, it wouldn&#8217;t be one of the most widely-traded commodities. We wouldn&#8217;t be talking about it. But every person is different. They have varied preferences, and I think there&#8217;s something to be said for spending a little extra on things that boost someone&#8217;s happiness and really their productivity. For some people, all the coffee out there, whether you get it at the coffee shop \u2026 make it at home \u2026 you&#8217;re going to get an identical reaction. That&#8217;s some people, but other people \u2026 maybe guys like Jeff, right \u2026 a higher-end brand \u2026 maybe the retail experience. Something like that can actually be encouraging, motivating, part of an effective routine. It&#8217;s actually making someone more productive and driving their performance at work. Before COVID, we actually had free coffee in our office, and sometimes I&#8217;d I drink that, but I would still go across the street to the Starbucks as an excuse for some fresh air to see other people. Most importantly, I have a strong preference for iced coffee, which just is not the same out of the fridge. I don&#8217;t know why nobody can seem to get that right, but that&#8217;s just a perfect example of why coffee is more than some kind of \u2018thing\u2019 we just shut our eyes, and then kick back. I&#8217;m not saying it&#8217;s sustainable for everyone to go out and spend like crazy on coffee or stopping by the Starbucks twice a day or something like that. But within reason, I do believe some people \u2026 a cup of their preferred coffee can play a role in increasing their productivity, maybe even if they&#8217;re more productive, their income \u2013 enough to compensate for that marginal cost you might incur from spending a little extra. If you just think about it in dollar terms, the difference between spending something like $3 a day on coffee or $1, as a hypothetical, it&#8217;s going to end up something like $700-$750 a year, and that&#8217;s nice to have $700 more in your pocket, right? That&#8217;s something you could invest. But at the same time, is it going to change your quality of life? Probably not. But coffee is one of those things that isn&#8217;t purely utilitarian, and like I said, we get something out of it, and that \u2018something\u2019 can oftentimes be enough to cover your coffee habit whatever the price actually is. It just \u2026 it comes down to your tastes, which items you consume \u2026 that really make a difference in your day-to-day life.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What\u2019s Brewing in the Coffee Futures Market?<\/strong><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Steven Levine<\/strong><\/h3>\n\n\n\n<p>I don&#8217;t think my breakfast would be complete without a cup of coffee. It just seems to be a matter of complete habit now. It&#8217;s amazing. But what about coffee futures? If we look at coffee futures, I saw that they were fairly astronomical last year, maybe around the third-quarter, there were highly elevated prices. They&#8217;ve come down quite a bit. I think sometime in January \u2026 like January 11th or something like that \u2026 they&#8217;d hit a low of about $1.43 or something. $1.44. This is according to our IBKR Trader Workstation. They\u2019re still about that level now. They&#8217;re about, I don&#8217;t know, $1.52, $1.53. We&#8217;re in late January. So, how do you account for these moves? Is it weather in those producing, exporting countries? What can you break down for us?<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Sean McGovern<\/strong><\/h3>\n\n\n\n<p>Sure. Well, just looking at the price pattern, like you said, throughout a good portion of last year all the way up into the second-quarter or so, we were watching the agricultural commodities very closely, focusing [a] good amount of our research on those futures. Along with wheat and corn, coffee is one of the big winners in that sector, and as you said, coffee had really been in a two-year long bull run before the wheels started coming off back in the fall. And if you go back to August of 2020, coffee futures were trading around $1.15, $1.20 per pound or so. By August last year, you were seeing those futures double that \u2013 shooting up north to $2.40. But from then on, 2022 ended up being kind of a brutal year for coffee and most other crop futures as well in fact. Part of that widespread drawdown was perceived weakness on the demand-side by traders, which played a large role in commodity pricing across the board \u2026 whether it was crops or copper \u2026 anything like that.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/02\/001_2023-0127_TWS_AgriCommoditiy-Futures-1100x619.jpg\" alt=\"Commodities stock chart\" class=\"wp-image-175025 lazyload\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/619;\" \/><\/figure>\n\n\n\n<p>Monetary policy has been a major factor there with the interest rates in the U.S. and just about everywhere else rising quickly, ratcheting up concerns around economic growth. And we&#8217;ve also seen trade flows beginning to slow down, and that&#8217;s a really significant factor when you&#8217;re talking about a widely exported commodity like coffee. It had begun ticking up a bit into the new year once it became clear that major central banks like the Fed were getting ready to pull back on the size and frequency of these ongoing rate hikes, but that rally was derailed by some of the bullish supply-side factors we&#8217;re seeing at this point. And coffee is back toward those multi year lows around $1.55 or so.<\/p>\n\n\n\n<p>And yes, weather, like you said, is a huge factor in that coffee prices are heavily dependent on what&#8217;s happening in several key regions. Central and South America are the most important of those because you have Brazil, Colombia, Honduras, Costa Rica \u2026 all these huge <a href=\"https:\/\/arabica.coffee\/en\/\">arabica-producing<\/a> powerhouses \u2026 and those are just some examples.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Steven Levine<\/strong><\/h3>\n\n\n\n<p>You mentioned slowing trade flows. Is that mostly a consequence of the strengthening dollar, or is that a culmination of all sorts of catalysts involved in trade like \u2026 still \u2026 maybe some kind of COVID-zero type policy consequence from China? I don&#8217;t know if that has to do anything with coffee though, or? I\u2019m not sure.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>The Beans from Brazil<\/strong><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Sean McGovern<\/strong><\/h3>\n\n\n\n<p>It absolutely does. It absolutely does. So, the dollar has actually been weakening into this year. I think it peaked \u2026 if you <a href=\"https:\/\/www.tradingview.com\/symbols\/TVC-DXY\/\">look at the DXY [U.S. Dollar Currency Index]<\/a> \u2026 somewhere around $1.12, $1.14 \u2026 somewhere in there \u2026 last year. But coming into this year, we&#8217;re looking at it around $1.02 as of yesterday [January 19, 2023], I believe. So, we&#8217;re actually seeing a weakening dollar, and what you would think [is] that trade flows might speed up, because foreign countries would be getting more goods from the United States for more bang for their buck against dollar-denominated goods. But it&#8217;s just not enough. Aggregate demand appears to be falling. We saw both \u2026 in the U.S., alone, we saw exports and imports fall in the most recent data we have \u2026 I think it&#8217;s through November\u2026 and coffee is going to be hugely dependent on that. And it&#8217;s all reflective of demand, and it&#8217;s really been the demand-side.<\/p>\n\n\n\n<p>But I do want to highlight some of the supply-side factors that are playing a role, like you said, weather\u2019s a big deal \u2026 coffee has to grow in really delicate conditions, particularly in Brazil \u2013 that&#8217;s where most of the arabica comes from. By far, Brazil is one of the leading producers of arabica beans, and that&#8217;s kind of the higher-end bean. It&#8217;s a very fragrant, sweet kind of vibe, and most importantly for this conversation, they&#8217;re also the global benchmark for <a href=\"https:\/\/www.theice.com\/products\/15\/Coffee-C-Futures\">coffee futures on the Intercontinental Exchange<\/a>. That&#8217;s the bean we&#8217;re usually referring to when we talk about coffee futures contracts. As I said, we look at Brazil to get a real kind of broad sense of what&#8217;s happening in coffee markets, and they&#8217;ve had some strong rains lately that leads to very high levels of soil moisture in Brazil&#8217;s coffee growing regions. So, not only does that lead to good harvest, but also larger beans, and the larger the beans are, the fewer it takes to fill a bag, and that&#8217;s how they measure the yield \u2013 in bags. So, that&#8217;s going to kind of inflate the yield a little bit, if the beans are larger in size.<\/p>\n\n\n\n<p>Brazil&#8217;s harvest typically follows a two-year cycle: one strong year and then a weaker year. This is typically supposed to be the weaker year if you follow that traditional cycle, but we&#8217;re actually looking at a larger annual harvest this year than last, because last year\u2019s was so far below average. And it&#8217;s not to say that this year is so abnormally strong. It&#8217;s going to be a larger harvest, but it&#8217;s not some supernaturally large\u2026. It&#8217;s just that last year was pretty small, but that still does suggest probably more suppressed pricing is ahead unless we do see macro conditions improve and demand is resurgent.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>China\u2019s Coffee Shops<\/strong><\/h2>\n\n\n\n<p>You mentioned China. China is a huge consumer of coffee, and they are opening back up. One thing interesting about China, specifically, is that their coffee culture is very much based around the coffee shop. Now, they do drink it at home, I&#8217;m sure, but going out to the coffee shop and kind of having that experience at the Starbucks \u2026 whatever chains they have out there \u2026 that&#8217;s the big thing for them, and that will probably \u2026 when you have zero-COVID, you can&#8217;t go to the coffee shop. So, I do think that will play a role in what we see with coffee going forward.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>An Outlook on Robusta-Based Brands<\/strong><\/h2>\n\n\n\n<p>And the one last thing I&#8217;ll highlight, too, is \u2026 along with the arabica bean, there&#8217;s also the <a href=\"https:\/\/beans.at\/en\/kaffeewissen\/kaffeesorten-arabica-robusta\/robusta\">robusta bean<\/a>. That\u2019s seen as a lower-quality bean. It is kind of a little bit more rugged kind of flavor. It actually has a higher caffeine concentration. You get these mostly grown in Africa and Asia. It&#8217;s funny that arabica is actually from Ethiopia. That&#8217;s where it&#8217;s natively from, but that&#8217;s more known as a robusta-producing country. I think it&#8217;s about 50-50 there. But you get these robusta beans, and they are more protective against bad weather and other external conditions. Those we&#8217;re actually seeing a down year for, it looks like. I think in Indonesia, they&#8217;re going to have a 10-year low in the harvest for the robusta beans. Uganda [is] seeing some problems, too, and that could create some price \u2026 some cost pressure on the lower-end brands you see at the supermarket, not the sort of luxury brands that are using pure arabica, but a lot of the kind of maybe store brands and things like that. They&#8217;re going to feel the problems we&#8217;re seeing with robusta beans.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Steven Levine<\/strong><\/h3>\n\n\n\n<p>Is that like the \u2018<a href=\"https:\/\/www.myfoodandfamily.com\/brands\/maxwell-house\">Maxwell House<\/a>s\u2019 of the world or the <a href=\"https:\/\/www.chockfullonuts.com\/\">Chock Full o\u2019Nuts<\/a>, or something like?<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Sean McGovern<\/strong><\/h3>\n\n\n\n<p>Could be. Exactly. Right.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Steven Levine<\/strong><\/h3>\n\n\n\n<p>Interesting. You mentioned Starbucks, and I think that this is really interesting. We&#8217;ve also been talking a bit about the <a href=\"https:\/\/www.keurig.com\/beverages\/c\/beverages101\">Keurig pods<\/a>, and so I think that that&#8217;s also very [interesting]. Both these companies have earnings coming up, at least from the date of this recording [January 20, 2023]. And so, what do you think they&#8217;re going to tell us? I know that <a href=\"https:\/\/www.tradersinsight.news\/traders-insight\/securities\/macro\/coffee-talk-kdp-continues-to-combat-inflation-in-earnings-outlook\/\">Keurig Doctor Pepper had spoken a lot about inflationary prices<\/a> when it came to coffee and their pretty <a href=\"https:\/\/investors.keurigdrpepper.com\/2022-10-27-Keurig-Dr-Pepper-Reports-Strong-Q3-2022-Results-and-Reaffirms-Guidance-for-the-Year\">recent past earnings<\/a> \u2026 with Starbucks\u2019 presence in China as well, and some \u2026 I&#8217;m sure \u2026. dependency on revenues there. Are we bound to see any kind of changes or difference? Maybe input costs have changed for them with lower prices of coffee in terms of the commodity and keeping maybe consumer prices high? I don&#8217;t know if they&#8217;ve retracted them. I think they&#8217;ve raised them pretty recently.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Bottomless Coffee Consumption?<\/strong><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Sean McGovern<\/strong><\/h3>\n\n\n\n<p>Yes, definitely raising\u2026. Right off the bat, we can expect that falling commodity prices for coffee will ease some of the cost pressure that roasters and coffee shops were probably feeling last summer. That could suggest better margins on the products, but really near-term shifts in coffee prices are not always going to tell us a whole lot about what we should expect for earnings at these companies. Some of them actually secure lots of their supply well in advance of spot buying. I mean, Starbucks buys 12 to 18 months out from when they actually Intend to sell the coffee. I believe they keep a pretty big stockpile of stuff that they&#8217;re buying way out there along the curve as opposed to relying on spot-buying or something like that. So, it&#8217;s the commodity price of coffee is definitely a significant cost component \u2026 no doubt about it. But there&#8217;s really a lot more that goes into your bag of coffee at the store or your cup at the barista counter. You&#8217;ve got transportation costs, packaging \u2026 so many moving parts. Most investors [are] simply not going to be able to account for all those things. Understanding what&#8217;s happening on the demand-side, it might be more helpful \u2026 in kind of thinking about earnings from these guys, we know prices are rising in general, that&#8217;s certain, but we need to figure out how elastic is consumer demand in relation to these price increases. That is, how much does consumption of a product change in reaction to adjustment in price? Well, what the data we&#8217;ve seen thus far from previous earnings calls for different companies is that demand at coffee shops like Starbucks have remained relatively inelastic, with comparable sales pretty robust. It&#8217;s important to note that we&#8217;ve seen that into the most recently reported quarter. That doesn&#8217;t necessarily mean that will hold in the quarter coming up here, but consumption of coffee is remaining pretty steady from what we can tell, and that&#8217;s not surprising. As we&#8217;re all saying we consume it every single day, and I guess it can&#8217;t be such a surprise we&#8217;re all sitting here talking about our coffee loyalties. And yeah, we&#8217;re going to buy coffee.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Habits and Habitats<\/strong><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Steven Levine<\/strong><\/h3>\n\n\n\n<p>It&#8217;s true, and I think a big part of this also is consumer behavior. I know that Keurig Dr. Pepper will talk about, say, the \u2018at home\u2019 versus \u2018at office\u2019 type of consumption \u2013 and we&#8217;ve had lockdowns. We were at home for a considerable amount of time, and we do now have new policies now out here at IBKR. We&#8217;re working three days a week in the office. And, so, the question that I&#8217;ve got really is: Has coffee consumption behavior changed?&nbsp; We&#8217;ve got a litmus test we can ask people here. Michael, has your coffee consumption changed? Are you at home? Are you at work? Or&#8230;?<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Michael Kerrigan<\/strong><\/h3>\n\n\n\n<p>I don&#8217;t think my consumption level has changed.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Steven Levine<\/strong><\/h3>\n\n\n\n<p>Since, say, the lockdowns, for example.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Michael Kerrigan<\/strong><\/h3>\n\n\n\n<p>I probably drink the same amount of coffee, I think, and I haven&#8217;t changed my purchasing. I think the interesting thing that I have noticed for coffee change over the past year from the pandemic is I am an absolute lover of diner coffee, right\u2026.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Steven Levine<\/strong><\/h3>\n\n\n\n<p>I am, too, that&#8217;s great.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Michael Kerrigan<\/strong><\/h3>\n\n\n\n<p>It always tasted very good to me, but I&#8217;ve noticed over the past several months or past year of post-pandemic \u2026 is that it&#8217;s become very watery and changed \u2026 that I don&#8217;t know if diners\u2026. They&#8217;re obviously getting the squeeze for coffee, because obviously a lot of consumers go into the diners to get coffee and stuff like that, that that coffee quality has gone down dramatically, like it&#8217;s very watered down. But mine, myself \u2026 I think the fact that I am coming back in the office and pre-pandemic, the cost wise hasn&#8217;t really affected me. I drink the same amount, and now I use the company to supplement the coffee habits by taking their free coffee. So, from my perspective, I haven&#8217;t really changed, but I have noticed quality in some areas has gone down, and it could be cost. It could be anything. But something I used to like and go off, and now I&#8217;ve kind of stopped going to diners to get coffee.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Steven Levine<\/strong><\/h3>\n\n\n\n<p>That&#8217;s really unfortunate. I really like diner coffee as well, but they&#8217;re kind of skimping on how much they&#8217;re using? That&#8217;s interesting. What about you, Jeff? Are you drinking more coffee at home or? At work?<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Jeff Praissman<\/strong><\/h3>\n\n\n\n<p>I would say absolutely my habits have changed. I mean, the pandemic is the entire reason I discovered that Costco cold brew coffee. It&#8217;s fairly decent tasting, and the convenience of having it in my fridge versus having to drive somewhere if I&#8217;m not already out of my house kind of makes it my \u2018go to\u2019 when I&#8217;m working from home. So, I&#8217;m not drinking more. I&#8217;m just drinking different. Plus, I think that may be 20 bucks for a 12-pack. So, paying $1.70 per serving beats going to either Starbucks or Dunkin\u2019. With that being said though, Sean made a great point about the behavioral aspect of going to a barista or going to Starbucks or Dunkin\u2019, there is that little bit of luxury there. I&#8217;m not going to go out and buy a Ferrari, but I can go to Starbucks and spend $5 on iced coffee and just really enjoy it.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Steven Levine<\/strong><\/h3>\n\n\n\n<p>It\u2019s the same [for me]. I mean, obviously, I think that there&#8217;s a lot less Keurig being consumed, for example, with all the pods that we have at work if we&#8217;re working from home. So, a lot of that gets unused, I suppose, and so \u2026 I don&#8217;t know \u2026 the surplus of it. I don&#8217;t know, Sean. Do you think it&#8217;s going to be a big factor in, say, these companies\u2019 earnings that patterns of coffee consumption have or have not changed?<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Sean McGovern<\/strong><\/h3>\n\n\n\n<p>Not. I don&#8217;t expect that, really. I think we&#8217;ll continue to see in stores like Starbucks \u2026 I think people are still going. I think people actually want to go there more if we have people working remote all the time, it gets lonely. They want to have an experience. They want to go out and see people. And I know that&#8217;s how I felt. I know that is still something \u2026 it&#8217;s working remotely, which many people are\u2026. There&#8217;s kind of \u2026 that&#8217;s your incentive to get out, right?<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Grounds for Inflation?<\/strong><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Steven Levine<\/strong><\/h3>\n\n\n\n<p>Yes, you can&#8217;t do that virtually. It&#8217;s a whole other game, isn&#8217;t it, to have that kind of break from work when you&#8217;re working from home. But \u2026 you know, I always drink too much, so I know that I need to cut down, because I think I drink way too much coffee. I can say that if I spent what I spend today, and I put that aside, say, and I just drank the coffee at work, all that money from the bottle of instant \u2026 all the coffees from my local bakery when I go out \u2026 I would save all that, right. And my local bakery, it&#8217;s like $1.75 for a cup of coffee, and last year it was $1.50, so really \u2026 I think we talked about Inflation \u2026 in part \u2026 but what about, say, <a href=\"https:\/\/www.bls.gov\/ppi\/\">producer prices<\/a>? <a href=\"https:\/\/fred.stlouisfed.org\/series\/CUUR0000SEFP01\">Consumer prices<\/a>? According to, say, the Bureau of Labor Statistics? I mean, are we seeing any of that really come down? I know coffee was a huge concern at one point last year. Is it going to remain so? Are we in a certain lull, or do you think that it&#8217;s projected perhaps to scale back up again? Is there any way of knowing?<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Sean McGovern<\/strong><\/h3>\n\n\n\n<p>Yes, actually. And no, we have not seen the producer prices for coffee come down whatsoever. They&#8217;re actually close to the highs. Going to consumer prices first, coffee at home was rising more quickly than retail locations like quick service shops. <a href=\"https:\/\/www.npd.com\/\">NPD<\/a> has a data they put out on this, and the cost of brewing your own coffee at home was rising around 20% year-over-year in 2022 versus about 7% or 8% for a coffee at a quick service station. So, either way, pretty fast. But coffee at home was really where you saw the most inflation on the consumer side. As far as producer prices go, the BLS does have a series that covers <a href=\"https:\/\/fred.stlouisfed.org\/series\/PCU3119203119201\">coffee and tea manufacturing<\/a> in the PPI \u2013 Producer Price Index. So, producer prices for roasted coffee were also rising at a rate north of 20%, and that looks like they pass those on to consumers almost completely, right?<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Steven Levine<\/strong><\/h3>\n\n\n\n<p>Probably this diner that Michael&#8217;s going to\u2026.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Sean McGovern<\/strong><\/h3>\n\n\n\n<p>Maybe, right? Right? It breaks my heart, by the way, to hear about diners doing that, \u2018cause I also love diner coffee.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Steven Levine<\/strong><\/h3>\n\n\n\n<p>I know.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Sean McGovern<\/strong><\/h3>\n\n\n\n<p>And so, we&#8217;re seeing 20% increases in the coffee at home all throughout the fourth quarter. That was the quickest pace in about a decade. I was actually just at the grocery store yesterday, and I made a mental note about the prices I was seeing \u2013 sort of regular-sized bag, I guess 12 ounces \u2013 or so you think it&#8217;s 12 ounces, I&#8217;ll get to that. But anyway, it&#8217;s going anywhere from $4.99-$8.99 for the store brand or some of the familiar names: <a href=\"https:\/\/www.folgerscoffee.com\/\">Folgers<\/a>, Dunkin\u2019, all those guys. If you really break that down and assume you&#8217;re getting 15 cups of coffee out of that bag, you&#8217;re looking at anywhere from 30 to 60 cents a cup. Still a pretty good deal even with inflation. When inflation is 20% on something that&#8217;s 30 cents a cup, you might find it a little bit hard to notice, because it&#8217;s so relatively cheap, [but] that does add up, right? But what I really noticed was the <a href=\"https:\/\/www.businessinsider.com\/shrinkflation-grocery-stores-pringles-cereal-candy-bars-chocolate-toilet-paper-cadbury-2021-7\">shrinkflation<\/a> going on with some of these brands \u2013 I&#8217;m not going to say any names.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Steven Levine<\/strong><\/h3>\n\n\n\n<p>No, no, I think that&#8217;s pretty pervasive, actually. But yes, I understand.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Sean McGovern<\/strong><\/h3>\n\n\n\n<p>But there were definitely a few 11-ouncers mixed in there. They look like the 12-ounce bag. They might be the 12-ounce bag, but the net weight\u2019s only 11. There was even a 10.3-ouncer in there, but you know, selling at the same\u2014<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Steven Levine<\/strong><\/h3>\n\n\n\n<p>How much does the air weigh, right?<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Sean McGovern<\/strong><\/h3>\n\n\n\n<p>Right? Right? \u2026selling at the same price point of the bags that were 12 ounces, and it was still in that section with them. It didn&#8217;t have its own little thing to the side or anything. So, price inflation is definitely there. Sometimes a little hard to spot though, which really is good news for coffee drinkers, right?<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Steven Levine<\/strong><\/h3>\n\n\n\n<p>Yes, I mean, I guess unless you&#8217;re going to that diner.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Sean McGovern<\/strong><\/h3>\n\n\n\n<p>Yes, I guess so.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" width=\"1100\" height=\"619\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/02\/002_2023-0127_TWS_STOCKS-1100x619-1.jpg\" alt=\"Coffee stocks chart\" class=\"wp-image-184852 lazyload\" data-srcset=\"https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2023\/02\/002_2023-0127_TWS_STOCKS-1100x619-1.jpg 1100w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2023\/02\/002_2023-0127_TWS_STOCKS-1100x619-1-700x394.jpg 700w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2023\/02\/002_2023-0127_TWS_STOCKS-1100x619-1-300x169.jpg 300w, https:\/\/ibkrcampus.com\/campus\/wp-content\/uploads\/sites\/2\/2023\/02\/002_2023-0127_TWS_STOCKS-1100x619-1-768x432.jpg 768w\" data-sizes=\"(max-width: 1100px) 100vw, 1100px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/619;\" \/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>The Un-Coffee<\/strong><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Steven Levine<\/strong><\/h3>\n\n\n\n<p>That&#8217;s the unfortunate part of this whole thing.<\/p>\n\n\n\n<p>Okay, so, I&#8217;m going to switch tack here altogether, because I think that we&#8217;re all very much now informed. Thank you so much to everybody here. We&#8217;re not done quite just yet, because there&#8217;s an innovation it seems seeping into the world. I think it has a lot to do with<a href=\"https:\/\/www.coursera.org\/specializations\/esg-investing-financial-decision-in-flux\"> ESG [environmental, social, and governance-related concerns] and sustainability<\/a>, and this is all about sustainable coffee.<\/p>\n\n\n\n<p>There is now such a thing as a company that is producing coffee without any coffee beans at all. And I think that this is interesting. I thought I&#8217;d bring it up. It&#8217;s called <a href=\"https:\/\/shopminuscoffee.com\/\">Minus Coffee<\/a>. I found a company called Minus Coffee that&#8217;s doing this, and so I&#8217;m going to quote this from this article from <a href=\"https:\/\/foodinstitute.com\/focus\/uncommon-grounds-sustainable-beanless-coffee-unveiled\/\">Food Institute<\/a>. It was in January 10th of this year \u2026 and it says that coffee beans \u2018represent a crop that is the sixth most pollutive agricultural process concentrated in regions around the equator\u2019. So, reason for doing this? Producing coffee with coffee beans is just too pollutive. The article is citing Food Business News for this. And instead, Minus Coffee \u2018roasts upcycled roots, seeds and legumes, which are then brewed in a fermentation batch with caffeine\u2019, and the article tells us this information comes from Maricel Saenz. Don&#8217;t know if I pronounce the name correctly, but [the] CEO of Minus Coffee&#8217;s parent company Compound Foods. And these are comments made to Food Business News. With this kind of process going on, and attention on ESG and sustainability, is this concerning at all to the coffee industry? Does it disrupt anything? Does it affect prices? Would anybody switch to this? I don&#8217;t know if I would switch to this, but I&#8217;d like to hear your insights, Sean, into whether this is a disruptor or not.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Sean McGovern<\/strong><\/h3>\n\n\n\n<p>There&#8217;s been a whole bunch of these coffee substitutes that have been coming around. The first thing I noticed was the <a href=\"https:\/\/www.healthline.com\/nutrition\/mushroom-coffee\">mushroom coffee<\/a>. I think that that&#8217;s still out there.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Steven Levine<\/strong><\/h3>\n\n\n\n<p>Mushroom coffee?<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Sean McGovern<\/strong><\/h3>\n\n\n\n<p>I think that was marginally successful. I think some people are doing that and then they started throwing <a href=\"https:\/\/coffeeaffection.com\/what-is-nootropic-coffee\/\">nootropics<\/a>, which was like vitamins and things that was supposed to make your brain work better. Haven&#8217;t tried it, skeptical, but Minus [Coffee] is really interesting. I was looking into it, and the fermentation blend is supposed to have chicory, root beans, and some dried fruit, and that&#8217;s interesting since chicory was a really popular <a href=\"https:\/\/en.wikipedia.org\/wiki\/Inka_%28drink%29\">coffee substitute<\/a> in the Eastern Bloc countries in Eastern Europe during the \u201870s and \u201880s, when coffee was subject to rationing, and they actually called it \u2018<a href=\"https:\/\/inka.pl\/en\/history\">Inka<\/a>\u2019, which is kind of a play on \u2018<a href=\"https:\/\/en.wikipedia.org\/wiki\/Sanka\">Sanka<\/a>\u2019 in the U.S. \u2013 and maybe not a great endorsement, but definitely It&#8217;s not really new. It&#8217;s not the first time we&#8217;ve seen this kind of drink. And is it a threat to the industry? Yes and no. I&#8217;d say \u2018no\u2019, because coffee is simply so entrenched in our lives that it&#8217;s hard to imagine it being uprooted. And maybe that&#8217;s short-sighted, but even if it ever was, I feel like the major coffee producers would do something similar to what the fossil fuel industry is doing to combat the rise of renewables and the way that threatens their business model. Well, they&#8217;re buying the competition. If Exxon and Shell \u2026 guys like that \u2026 can leverage their assets and massive economies of scale to build out big solar power networks, I could see Starbucks or Keurig Dr. Pepper or some of these names we talked about \u2026 launching their own iterations of these fermentation batches \u2013 getting a good foothold in that market.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Steven Levine<\/strong><\/h3>\n\n\n\n<p>That&#8217;s a very, very interesting point. So, the more that these kinds of innovations spring up, the more M&amp;A opportunity there is out there for diversifying their product lines.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Sean McGovern<\/strong><\/h3>\n\n\n\n<p>Exactly.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Steven Levine<\/strong><\/h3>\n\n\n\n<p>That&#8217;s really, really interesting. This is great. Would anybody switch to it?<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Michael Kerrigan<\/strong><\/h3>\n\n\n\n<p>No.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Sean McGovern<\/strong><\/h3>\n\n\n\n<p>If you&#8217;re paying.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Jeff Praissman<\/strong><\/h3>\n\n\n\n<p>No, I wouldn&#8217;t switch either.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Steven Levine<\/strong><\/h3>\n\n\n\n<p>You wouldn&#8217;t switch either?<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Jeff Praissman<\/strong><\/h3>\n\n\n\n<p>No.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Steven Levine<\/strong><\/h3>\n\n\n\n<p>You haven&#8217;t tried it yet. I think you have to try it first, right?<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Michael Kerrigan<\/strong><\/h3>\n\n\n\n<p>I guess to me it&#8217;s like the Beyond Meat type thing. Coffee is ingrained in me. I don&#8217;t necessarily want to change it. I&#8217;m sure it probably tastes good, but it&#8217;s not something I would drink every day \u2013 a few cups a day.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Steven Levine<\/strong><\/h3>\n\n\n\n<p>Fair enough. I think I would wait until somebody else had it before I tried it. I think in some cases it&#8217;s a very good idea to have food tasters in the world \u2013 for <a href=\"https:\/\/www.tradersinsight.news\/ibkr-podcasts\/cooking-it-up-in-a-lab-investing-in-the-future-of-bioengineered-food\/\">the crickets<\/a> and the coffeeless coffee. Okay, so, I think that this is terrific. I think we&#8217;ve got amazing insights into coffee futures \u2013 what we might expect from Starbucks \u2026 from KDP \u2026 coming up. And what we as consumers are more informed about \u2013 our coffee purchases, and where our prices come from. So, thank you so much Sean, Jeff, Michael. Thank you all so much for being here \u2026 for taking the time. I hope we do this again.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Sean McGovern<\/strong><\/h3>\n\n\n\n<p>Fantastic. It was a pleasure<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Steven Levine<\/strong><\/h3>\n\n\n\n<p>For our listeners out there, you can read more commentary and market analysis at IBKR Traders\u2019 Insight. You can keep abreast about topics we&#8217;ve discussed here today, as well as a wide range of other news critical to your investment decisions. McAlinden Research [Partners] has a host of articles on several themes \u2013 from central banks and gold buying to issues involving cybersecurity. And for a full list of financial educational offerings, visit the <a href=\"https:\/\/www.interactivebrokers.com\/en\/education\/tradersu\/ibkr-campus.php\">IBKR Campus at ibkr.com<\/a>, where as always, all of our educational material is provided to the public at no cost.<\/p>\n\n\n\n<p>And until next time, I&#8217;m Steven Levine with Interactive Brokers.<\/p>\n\n\n\n<p>&#8212;<\/p>\n\n\n\n<p><strong>Learn More<\/strong><\/p>\n\n\n\n<p><a href=\"https:\/\/www.usda.gov\/oce\/commodity\/wasde\">United States Department of Agriculture &#8211; World Agricultural Supply and Demand Estimates (Jan 2023)<\/a><\/p>\n\n\n\n<p><a href=\"https:\/\/apps.fas.usda.gov\/psdonline\/circulars\/coffee.pdf\">United States Department of Agriculture &#8211; Coffee: World Markets and Trade (Dec 2022)<\/a><\/p>\n\n\n\n<p><a href=\"https:\/\/helenacoffee.vn\/coffee-price-forecast-2023-global-coffee-production-forecast-to-increase-by-7-8-million-bags\/#:~:text=Coffee%20Price%20Forecast%202023%20%E2%80%93%20In,bags%2C%20mainly%20because%20Brazil's%20arabica\">Coffee Price Forecast 2023: Global Coffee Production Forecast To Increase By 7.8 Million Bags<\/a><\/p>\n\n\n\n<p><a href=\"https:\/\/www.ico.org\/new_historical.asp?section=Statistics\">International Coffee Organization \u2013 Historical Data on the Global Coffee Trade<\/a><\/p>\n\n\n\n<p><a href=\"https:\/\/www.ico.org\/Market-Report-22-23-e.asp\">International Coffee Organization \u2013 Monthly Coffee Market Report<\/a><\/p>\n\n\n\n<p><a href=\"https:\/\/www.ncausa.org\/Research-Trends\/Economic-Impact\">National Coffee Association \u2013 The Economic Impact of the Coffee Industry<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Find out what\u2019s brewing in the coffee futures market with Sean McGovern, vice president of research at McAlinden Research Partners. We cover everything from Brazil\u2019s weather to international trade to the Fed\u2019s monetary policy to China\u2019s Zero-COVID policies and more.<\/p>\n","protected":false},"author":2,"featured_media":184853,"comment_status":"open","ping_status":"open","sticky":true,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21,10842,18,6,13857,8,9,26,3],"tags":[483,14699,147,6585,77,1820,1504,460],"contributors-categories":[13576],"class_list":{"0":"post-184628","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-commodities","8":"category-ibkr-podcasts","9":"category-macro","10":"category-north-america","11":"category-podcasts","12":"category-region","13":"category-securities","14":"category-text-articles","15":"category-traders-insight","16":"tag-coffee","17":"tag-coffee-futures","18":"tag-commodities","19":"tag-covid-19","20":"tag-fed","21":"tag-futures-market","22":"tag-monetary-policy","23":"tag-podcast","24":"contributors-categories-interactive-brokers"},"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast SEO v27.5) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Time for a Coffee Break? | IBKR Podcasts<\/title>\n<meta name=\"description\" content=\"Find out what\u2019s brewing in the coffee futures market with Sean McGovern, vice president of research at McAlinden Research Partners. 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