Starbucks CEO Howard Schultz Blames Speculators For Surging Coffee Prices
(Reuters) - Starbucks Coffee Co (SBUX.O) Chief Executive Howard Schultz on Friday once again laid the blame for surging coffee prices at the feet of speculators, saying his chain had no problem getting beans.
Arabica coffee futures have rallied over the past nine months to a 34-year high this month at $2.9665 per lb, basis second position. The market initially climbed on fund buying but was sustained by tight supplies of washed beans. Many analysts expect it will soon climb to $3 per lb.
"Every supplier that I talk to, every producer, first thing I ask is, 'Is there any problem with supply and demand?'" Schultz said. They tell him no, he said.
Global stocks are at the lowest level since the International Coffee Organization began keeping records in 1965. The ICO has said stocks could fall lower.
"I think it's artificial. I think financial speculation has really stepped into the market," Schultz said at the National Coffee Association meeting on Friday.
Coffee consumers will not "respond positively" to higher coffee prices, Schultz added.
"I think it's a very hard dialogue with the consumer, face to face, as we have to as a retailer, when in fact there probably isn't a substantive answer," Schultz said.
Starbucks is the biggest coffee shop chain in the world.
Many roasters have been forced to pass along their increasing costs to consumers. Most recently, Kraft Foods (KFT.N) raised its list prices for most of its Maxwell House and Yuban roast coffees by 22 percent, its fourth and biggest increase in the past year.
Rival J.M. Smucker Co (SJM.N) hiked its price for Folgers by 10 percent last month.
(Editing by Walter Bagley)
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First Posted: 03/18/11 06:49 PM ET Updated: 05/25/11 07:40 PM ET