Coffee and dairy prices were the only commodities to post declines this week. Coffee was down 0.9%. Coffee prices are only down 1.2% year-to-date but have fallen nearly 19% from March peak levels. Milk prices were down 0.7% and cheese was down 6%, but both are still up year-to-date, +6.5% and +3%, respectively. The commentary coming out of the Indian Coffee Trade Association reflected hopes of higher production in 2008 and 2009 and a slowdown in exports. It is estimated that India's coffee production in the fiscal year ending September 2009 will rise 12% and global coffee production 9%. The Indian coffee crop is benefiting from a better growing season.
  • Along the Mississippi in Missouri and Illinois, the National Weather Service is predicting the worst flooding in 15 years. To date, flooding has destroyed nearly 20% of the Midwest's crops. Many farmers have commented that the current condition is 2x as bad as 1993. The flooding is hitting the corn crop hard, with some forecasters saying the crop will be down 10% this year. The biggest movers this week were once again corn (+10.2%), wheat (+8.3%) and soybeans (+5.8%). Corn prices are now up 56% year-to-date and up over 80% YOY.
  • The company most levered to declining milk and coffee prices is Starbucks.