The above table is my raw commodity index inside of The PPT. As you can see, over the past two years most commodities have collapsed. No wonder SBUX, SJM, DNKN and GMCR are doing so well. Coffee is down 60%!
Curious as to how HSY got to $90 p/s? Look no further than the price of cocoa and sugar down 30%.
My guess, companies had some hedges against the rise in commodity prices. But they’re probably going to lighten up on them now, since there isn’t any pressure on raw materials. If this trend continues, miners and farmers enter the fag box and never leave. Manufacturers will see their margins explode, even grocery stores stand to benefit. Look at NGVC as of late.
If timber comes in, residential construction will benefit, as well as makers of furniture. The fact that cotton is down 25% helps retailers and clothing manufacturers, just like a lower price of oil and distillates helps truckers and shippers.
Make no mistake, lower natty and coal is by design, a great tax cut for the unwashed American pleb shopping for broccoli at Walmart.
Wheat and corn have been weak, helping chicken companies like PPC and SAFM. There are so many benefits to lower input prices it’s hard to isolate a single idea. I think it’s fair to say it’s a gigantic boon for the entire country. We’ve been blessed with cheap coal and natural gas, now everything else is getting cheap.
Thoughts?