Nestle has its coffee needs "covered" in erratic market, CEO says
June 4 (Reuters) - Nestle SA, the worlds biggest coffee maker, has its coffee needs "covered" and expects arabica prices will continue to fall after a volatile surge to a 24-month high in April, the company's chief executive officer said on Wednesday.
"We're covered so we don't have nervousness there," Paul Bulcke, CEO of Nestle, said at the Nestle Investor Seminar in Boston.
Bulcke did not specify the duration of the company's coffee coverage.
Arabica coffee futures, the type of bean typically used in roast-and-ground blends, soared nearly 90 percent between January and April to $2.19 per lb. This strong price surge took the industry by surprise as an unprecedented drought reached top grower Brazil's arabica region.
On Tuesday, the biggest U.S. roaster J.M. Smucker, maker of Folgers, reacted to the volatile market and raised retail prices by around 9 percent.
Prices have since dipped around 20 percent.
"I think it's going to soften again," Bulcke said.
Instant coffee is typically processed from robusta coffee , which holds a discount to arabica. Nestle makes Nescafe instant coffee and Nespresso single-serve, a brew made from arabica beans. (Reporting by Marcy Nicholson; Editing by Bernadette Baum)
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