The Journal Gazette
 
 
Friday, May 22, 2020 1:40 pm

Column: Coffee moves wildly during pandemic

WALT and ALEX BREITINGER | Breitinger & Sons LLC

Coffee prices dripped to a three-month low on Friday, trading at less than $1.03 per pound.

The commodity has been extremely wild during the COVID-19 pandemic, with five moves of more than 20% so far this year.

Demand and prices surged as Americans hoarded groceries, including their daily caffeine fix, pushing prices near $1.30 per pound in March. During the last few months, demand has been falling as consumer use up supplies at home.

Meanwhile, the Brazilian currency, the real, has fallen to record low prices. Brazil is the world's second-largest coffee grower, and as its currency collapses, it pulls down prices of Brazilian-produced commodities such as sugar, soybeans and coffee.

Despite the current low levels, economists warn that market jitters could send coffee flying high again. Brazil's currency is tanking because of a worsening coronavirus outbreak that could threaten coffee supplies.

Silver linings

In the midst of a general market malaise, silver recently became one of the few commodities to reach a break-even for the year, topping $18 per ounce Wednesday.

Prices are now up more than 50% from their mid-March lows, a sign of how drastically investor sentiment has surged during the last two months.

The “silver rush” has proven more urgent than the gold buying as investors seek both safety and profits during economic uncertainty. Silver is both a safe haven and industrial commodity, helped by low interest rates, speculators and conservative investors alike. As of midday Friday, July silver futures traded at $17.65.

USDA announces farm aid

The U.S. Department of Agriculture announced the details of a much-anticipated farm aid program this week. Under the Coronavirus Food Assistance Program, U.S. farmers stand to receive compensation for market losses they took because of the coronavirus outbreak and supply chain disruption. Payments are available across a wide range of crops and animals, with amounts varying by the size of market losses.

In this column, we've highlighted hard-hit markets that are now seeing support. Dairy farmers can receive more than 6 cents per pound for milk produced during the first quarter. Livestock producers may receive funds for each animal they sold during the crisis, amounting to more than $100 per head for cattle and $18 per head for hogs. Row crop farmers stand to receive 67 cents per bushel for corn and 95 cents per bushel for soybeans they sold during the downturn.

Producers can reach out to their FSA office for more details.

Walt and Alex Breitinger are commodity futures brokers in Valparaiso. They can be reached at (800) 411-3888 or www.indianafutures.com. This is not a solicitation of any order to buy or sell any market.


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