Freshly Brewed Coffee ETN Perked Up Over July | ETF Trends

A coffee exchange traded fund has enjoyed a strong July, with robusta coffee prices heading for their biggest monthly gain in a decade, on signs that the coronavirus pandemic has helped stimulate drinkers.

The iPath Series B Bloomberg Coffee Subindex Total Return ETN (NYSEArca: JO) increased 11.7% over the past month. ICE Coffee futures strengthened 14.2% to $1.1535 per pound over the past month.

Meanwhile, Robusta coffee futures surged about 16% in London this month, the biggest gain for a most-active contract since June 2010 as the coronavirus forced more consumers to enjoy home coffee consumption, Bloomberg reports.

While worldwide lockdown measures to contain the spread of the novel Covid-19 outbreak have shuttered cafes, restaurants, and offices, more stranded-at-home consumers have supported the demand for robusta beans, which are typically favored to brew instant coffee.

“Nestle results provide confirmation at-home sales is doing very well,” Carlos Mera, an analyst at Rabobank in London, told Bloomberg. “It was priced into some extent, based on IRI data from the U.S., but this is more global.”

Mera was referring to Nestle SA’s latest report that highlighted higher sales amid strong demand for coffee in home offices. Specifically, sales of the company’s Starbucks-brand coffee products surged over 10%, while Nespresso had mid-single-digit growth, according to Nestle.

“We have remained resilient in a rapidly changing environment, delivering solid organic growth and improved margins in the first half. These results demonstrate the agility of our business and the strength of our diversified portfolio across geographies, product categories, and channels,” Mark Schneider, Nestlé CEO, said, according to Food Ingredients.

Robusta spreads have narrowed and stockpiles have declined to their lowest levels since the start of last year. Meanwhile, speculators covering their failed short positions have also helped prop up the price rally in recent weeks.

Looking ahead, the smaller robusta crops expected in Brazil and Vietnam for the 2020-21 season could also provide bullish support for prices, according to Rabobank.

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