UPDATE 1-Starbucks CFO says prices locked in for 70 pct of 2016 coffee needs
(Recasts; adds CFO quote, background, company forecasts)
NEW YORK, April 23 (Reuters) - Starbucks Corp has locked in prices on 70 percent of 2016 coffee needs at "favorable" levels when compared to its 2015 coffee costs, its chief financial officer said in a call to announce the company's fiscal second-quarter results.
The recent drop in coffee prices to 13-month lows prompted Starbucks to begin extensively covering its 2016 needs, said Starbucks CFO Scott Maw.
The world's largest coffee chain's hedging approach reflects a new, more cautious buying strategy among U.S. roasters taking advantage of current price levels to protect against the possibility of a price surge as a result of a potentially weak crop in top-grower Brazil.
Roasters are fixing prices farther into the future than they have in three years, traders and roasters say, and the commercial long position in arabica coffee on ICE Futures U.S. hit a record high late last month, though it has since declined slightly.
In January, Starbucks had said it had locked in prices for 94 percent of its 2015 coffee needs.
Maw said this resulted in coffee costs for fiscal 2015 that were below average market prices.
"Our coffee team's patience around coffee pricing paid off," he said, noting that the company's buying team waited out spikes above $1.90 a lb.