Your morning fix of java and sweetener just got less expensive, thanks to rising production around the world. Coffee and sugar prices fell near two-and-a-half year lows last week as the markets adjusted to oversupply.
Hefty coffee harvests are expected in Brazil, the world’s largest producer, while rising sugarcane production in India and Thailand could flood the global sugar market.
Unfortunately for many Americans, the savings may be limited as the underlying cost of the raw commodities is only a small component of a $5 latte; coffee futures are worth $1.15 per pound, sugar costs less than 12 cents per pound, and milk trades for less than 15 cents per pound.
Weather clouds grains
Corn, wheat, and soybeans fell last week as farmers cheered better weather forecasts.
Across much of the Corn Belt, farmers have been worried that cold, wet weather could delay spring planting, but warmer and drier weather is expected this week, hopefully allowing producers to get into the fields. This could boost corn and soybean acreage this year, an expectation that sent both markets to a two-week low Friday, at $3.78 and $10.32 per bushel respectively.
Meanwhile, wheat farmers across Colorado, Kansas, Oklahoma, and Texas are expecting heavy rains, which should alleviate drought concerns, a factor that pulled Kansas City wheat down to $4.85 per bushel Friday.
Housing hoists lumber
Lumber prices exploded to all-time highs again last week, topping $550 per thousand board feet as U.S. new home construction reached a 10-year high.
Housing starts have been steadily rising since bottoming out in 2009 as the housing market recovered, with new construction almost tripling over the past decade. After the devastation of Hurricanes Harvey, Irma, and Maria last year, there has been even more demand for lumber as people rebuild.
Aside from rising construction demand, lumber has been rising due to limited supplies. Major wildfires in the Pacific Northwest destroyed timber and limited sawmill output last year. Worse yet, the U.S. levied a 20 percent tariff on Canadian lumber imports, which account for one-third of U.S. wood supplies.
Lumber price increases are especially painful for builders and new home buyers who also are being hit by climbing mortgage rates and rising prices for concrete, drywall and steel. Despite the rising prices, demand for construction hasn’t shown signs of slowing down yet.
BY Walt Breitinger and Alex Breitinger
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