How can I invest in coffee??

C

Cabin111

I saw a place where coffee can be an inflation hedge...Such as a commodity. I do not want to invest in Starbucks or McDonalds. How can I play this commodity? I do not want to buy the commodity itself (options), but in companies that do major handling of the product. Maybe a boring, stable, middleman (woman) who had a dividend. Thoughts??
 
qlai said:
Wouldn't ETFs be better?
https://www.investopedia.com/articles/investing/080415/top-coffee-etfs.asp
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McDonald's earning came up a little short today. Stock is down slightly. It might be the way to go during a recession. People may drop their conscience and pocketbook (Starbucks) and go for the cheaper MCD. Also I could do covered calls. Could buy 100 shares of MCD and do a "sell to open" $200. for Jan 2021...Grab a fair dividend. Just an idea...That's how my mind works.
 
Cabin111 said:
McDonald's earning came up a little short today. Stock is down slightly. It might be the way to go during a recession. People may drop their conscience and pocketbook (Starbucks) and go for the cheaper MCD. Also I could do covered calls. Could buy 100 shares of MCD and do a "sell to open" $200. for Jan 2021...Grab a fair dividend. Just an idea...That's how my mind works.
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MCD does have a beta of .3 which would tend to support your thesis.
 
Cabin111 said:
McDonald's earning came up a little short today. Stock is down slightly. It might be the way to go during a recession. People may drop their conscience and pocketbook (Starbucks) and go for the cheaper MCD. Also I could do covered calls. Could buy 100 shares of MCD and do a "sell to open" $200. for Jan 2021...Grab a fair dividend. Just an idea...That's how my mind works.
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And your idea has nothing to do with coffee as a hedge. You're playing the company's general earnings machinations, not a single subset of them. I reckon' the margins on their coffee is lower than on all the other items they offer.

If you really think coffee can be an inflation hedge, have you considered coffee futures?
 
Overnight said:
And your idea has nothing to do with coffee as a hedge. You're playing the company's general earnings machinations, not a single subset of them. I reckon' the margins on their coffee is lower than on all the other items they offer.

If you really think coffee can be an inflation hedge, have you considered coffee futures?
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You are correct on earning machination. But, I also see it in two different ways...Assets under management and addiction.

All the brokerage firms (banks) want to see assets under management (or cheap deposits). Schwab became the 7th largest bank in the US from this formula!! Maybe they can raise their fees (not likely), or just glean from the assets and the money float. Banks can lower their CD rates and make more money, if the money/clients don't bail. For McDonald's coffee is almost a loss leader. If they were to raise their coffee prices 10-20%, I still think they would retain many of their customers and can sell their other "junk" as well.

We know people LOVE coffee...There is a great craving for it. Go to an AA or NA meeting and see the cross/transfer addiction it has created. For the most part, coffee is socially acceptable. And again, even if coffee at McDonald's is a loss leader, it will bring the craving/addicts through the door...To again, sell them an Egg Mcmuffin or a Big Mac since they are there. Just my thought process...And maybe McDonald's as well...
 
Plenty of resistance ahead for Coffee futures
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