July 24 (Reuters) - Starbucks Corp, the world’s biggest coffee chain, has locked in coffee prices for 60 percent of its 2015 needs and expects its full coffee costs for the year to be close to 2014 prices, a company executive said on Thursday.
“We have about 60 percent of our coffee price locked for next year and those prices are roughly flat to this year, up perhaps a little bit,” said Starbucks Chief Operating Scott Maw, , speaking on a conference call to discuss the company’s third-quarter financial results.
“Where we actually end up for the year, we still think it’ll be roughly neutral but will depend how we lock in that last 40 percent.”
Coffee futures prices are notorious for their volatility but this year, the benchmark contract on ICE Futures U.S. has been more wild than usual.
Starbucks benefited from a 2-1/2-year downtrend that bottomed out in late 2013. But in late January, an unprecedented drought in top grower Brazil took the entire coffee industry by surprise as the benchmark contract nearly doubled in price within three months to a 26-month high above $2 per lb in April.
The contract has since fallen and finished the April-June quarter down about 5 percent.
“Next year, we expect commodity cost to be roughly neutral or have a minor unfavorable impact,” Maw said, referring to the company’s fiscal year that begins in October.
A July 23 Reuters poll of 26 traders, roasters and analysts forecast the ICE spot arabica futures contract a will end 2014 at $1.80 per lb, up just 1 percent from Thursday’s settlement. (Reporting by Marcy Nicholson; Editing by Cynthia Osterman)