Breaking News
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Looking To Invest In Coffee? What About This Piping Hot ETN

By Investing.com (Tezcan Gecgil/Investing.com )ETFsSep 15, 2021 04:17
ca.investing.com/analysis/looking-to-invest-in-coffee-what-about-this-piping-hot-etn-200487785
Looking To Invest In Coffee? What About This Piping Hot ETN
By Investing.com (Tezcan Gecgil/Investing.com )   |  Sep 15, 2021 04:17
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Coffee prices hit multi-year highs in 2021. In August, the commodity recorded the 10th consecutive month of surge, mainly due to concerns about weather-related supply constraints and pandemic-triggered freight cost increases.

According to the International Coffee Organization:

“The level reached in August 2021 represented an increase of 51.3% since the start of the current coffee year.”

A ninth-century Ethiopian herder allegedly discovered coffee, thanks to his goats becoming over-energetic after eating berries from a particular tree. As one of the most-traded commodities worldwide, coffee is cultivated in more than 70 countries.

There are four main coffee types: Arabica, which gets the most attention, Robusta, Excelsa and Liberica. Brazil leads coffee production with more than 30% of the world’s cultivation, most of which is Arabica coffee.

Vietnam, Columbia, Indonesia and Ethiopia follow Brazil, together producing around 75% of the world’s coffee. China, India, the U.S. and Indonesia have the highest coffee consumption worldwide.

As consumers enjoy their daily cups of joe, markets pay close attention to coffee prices, which can be unpredictable due to fluctuations in production, freight costs or geopolitical developments. For instance, in late July, coffee prices skyrocketed due to an unexpected frost in Brazil.

Despite the challenges in the industry, trading opportunities still remain strong. Interested readers could invest in the coffee industry through coffee-related stocks in the consumer discretionary and consumer staples sectors, coffee futures or an exchange-traded note (ETN). Let’s take a closer look.

iPath Series B Bloomberg Coffee Subindex Total Return ETN

Current Price: $51.34
52-Week Range: $30.89 - $58.50
Expense Ratio: 0.45% per year

This is an ETN issued by Barclays. We previously covered various characteristics of ETNs, like the counter-party risk of its issuer, i.e. Barclays in this case.

The iPath® Bloomberg Coffee Subindex Total Return (SM) ETN (NYSE:JO) gives exposure to coffee prices via futures contracts on the commodity. The ETN started trading in January 2018, and net assets stand at $100.5 million.

JO Weekly Chart.
JO Weekly Chart.

JO tracks the Bloomberg Coffee Subindex Total Return index, which currently comprises one futures contract on the commodity. This soft commodity trades on the Intercontinental Exchange in the futures market, where “The Coffee C contract is the world benchmark for Arabica coffee.” Soft commodities are those grown, rather than mined.

Such futures contracts are typically rolled according to a fixed schedule. We should remind readers that a futures-based index might not fully track the results on spot coffee prices. Nonetheless, JO still offers a viable way to invest in coffee through an unleveraged investment in futures.

So far this year, the ETN has returned close to 37% and hit a record high in late July. The 52-week low of $30.89 was seen in early November. Coffee bulls should do further due diligence on the commodity and the ETN with a view to buying the dips.

Readers might also be interested to know that many traders watch sugar, another soft commodity, and coffee simultaneously. Sugar saw multi-year highs in August as well. Market participants wonder whether cocoa prices might also explode to the upside soon.

On a final note, investors could invest in shares of companies that have exposure to coffee, too.

Examples of such stocks include (in alphabetical order): Coca-Cola (NYSE:KO), Keurig Dr Pepper (NASDAQ:KDP), JM Smucker Company (NYSE:SJM), McDonald’s (NYSE:MCD), Nestle (OTC:NSRGY), Restaurant Brands International (NYSE:QSR) and Starbucks (NASDAQ:SBUX). The premium coffee business is especially a high-margin segment.

Interested investors could, for example, buy an exchange-traded fund (ETF) that would give access to several of these companies. Examples include:

Invesco Dynamic Food & Beverage ETF (NYSE:PBJ): up 16.4% YTD;

iShares Evolved U.S. Consumer Staples ETF (NYSE:IECS): up 7.5% YTD;

Consumer Discretionary Select Sector SPDR® Fund (NYSE:XLY): up 13.8% YTD.

Looking To Invest In Coffee? What About This Piping Hot ETN
 

Related Articles

Looking To Invest In Coffee? What About This Piping Hot ETN

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (2)
Ban gla Tv
Ban gla Tv Sep 15, 2021 14:47
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Robert Sowders
Robert Sowders Sep 15, 2021 14:07
Saved. See Saved Items.
This comment has already been saved in your Saved Items
RoutineBi dutytcoin casth
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email