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Starbucks pares hedging programme despite coffee market surge

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Starbucks pares hedging programme despite coffee market surge

Starbucks has slashed its use of hedges against coffee price shocks even as the price of beans has soared, raising concerns that it may be unusually exposed to market swings. 

The world’s largest café chain held less than $200mn worth of fixed-price contracts for so-called green, or unroasted, coffee at the end of its fiscal year in September, according to its newly filed annual report, down from $1bn as recently as 2019. 

The decline has occurred at a time when roasters confront supply deficits after persistently poor crops in major exporters such as Brazil. Benchmark coffee futures rose above $3 a pound in New York on Friday to a 13-year high, following a more than 70 per cent gain in the past 12 months. 

Starbucks buys 3 per cent of the world’s coffee to supply its 40,000 cafés and retail businesses. A team based in Lausanne, Switzerland manages purchasing high-quality arabica beans under a subsidiary named the Starbucks Coffee Trading Company. The decline in the value of its fixed-price contracts has attracted attention on Wall Street. 

“They are substantially less hedged than they used to be. It makes the next 12 months of coffee prices more important than they’ve ever been,” said Gregory Francfort, a restaurant analyst at Guggenheim Securities.   

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New Starbucks chief executive Brian Niccol is in the the early stages of a plan to revive flagging sales at cafés. One of his goals is to restore its appeal as a community coffee house. “At Starbucks, coffee comes first,” he said in video remarks last month. 

The company is not alone among roasters in letting price-cover slip during an explosive market rally. Data from the US commodity futures regulator shows commercial traders have sharply reduced their contracts to buy arabica.

A coffee trader familiar with Starbucks’ operations says the majority of its purchases are made with so-called “price-to-be-fixed” contracts, which establish a quantity, delivery month and the amount of price premium to New York’s futures market. The final purchase price is agreed later.

“When a market rallies significantly and quickly, as coffee has done, the roasting community in general tends to let coverage decline,” the trader said.

Starbucks’ 56 “tier one” suppliers range from global commodities trading houses such as Louis Dreyfus and Olam to farmer co-operatives. The company in 2021 said it bought 800mn lbs of coffee annually — an amount that would cost $2.4bn at current benchmark prices. 

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Starbucks had $1.1bn in green coffee purchase obligations on its books as of September, according to its annual report.

The company buys green coffee using two types of contracts: fixed-price and price-to-be-fixed, according to its annual report. For the latter, the company also uses derivatives contracts to insure against market gyrations. 

Line chart of $mn showing Starbucks cuts value of 'fixed-price' coffee purchases

“Like others, right now we’re remaining agile in a very dynamic market,” Starbucks said in response to questions. “An example of that agility is that our current priced coverage is slightly lower than our typical range of 9-18 months.”  

Starbucks executives rarely discuss coffee hedging with Wall Street, but in 2021 — another period of furious price rises — then-CEO Kevin Johnson told analysts the company purchased 12 to 18 months in advance, and at the time had locked in prices for the next 14 months.

“We may be the only large buyer of green coffee that uses this approach, and that will serve us well as it gives us a significant advantage relative to our competitors who, if they don’t buy this far in advance, will certainly not have that cost structure that we put in place,” he said.

The value of Starbucks’ price-to-be-fixed contracts has fluctuated, ending the fiscal year in September at $929mn, according to the annual report.

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That sum was more than a year ago, but well below levels of 2021 and 2022. Coffee derivatives contracts held by Starbucks were worth $154mn, the lowest September value since 2020. 

Starbucks’ coffee trading operation is headed by Andres Berron, an eight-year employee of the company, according to his LinkedIn page. The company declined to make him available for comment. 

Starbucks said its approach to purchasing coffee hasn’t changed. The company pointed out that its current stocks of physical coffee are a cushion against volatility in the spot market.

Inventories of unroasted and roasted beans combined were worth about $920mn as of September, according to the annual report, the lowest fiscal year-end figure since 2021. 

“We keep a healthy and ample green coffee inventory that outpaces other roasters,” Starbucks said. 

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Global coffee production has been rocked by poor weather. The US Department of Agriculture last week cut its production forecast for Brazil, the top supplier, citing irregular rainfall and high temperatures that could depress its next harvest. 

“The global coffee market just can’t seem to catch a break,” said Kona Haque, a commodities analyst at ED&F Man in London. “Just when you think maybe this year we’re going to get a big crop and finally get back to a surplus and rebuild our stocks, you get another adverse-weather event in either Brazil or Vietnam, and things get tight again.” 

“Because markets now are tighter than usual, there is upward pressure on prices,” she added. “In a rising price environment, clearly you want to be hedged. You do not want to be exposed to rising spot prices.” 

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With the white nationalist group Patriot Front, what you see is not what you get

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With the white nationalist group Patriot Front, what you see is not what you get

Members of the group Patriot Front ride the subway as a commuter looks on, in Washington, D.C., on July 4.

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The sight of hundreds of masked men roaming the streets of Washington, D.C., on July Fourth weekend, wearing khakis, blue shirts and uniform patches, was chilling to some of the city’s residents.

For many Americans, it was the first they heard about Patriot Front, a white nationalist organization that was born out of the deadly 2017 Unite the Right rally in Charlottesville, Va. A now-viral Reuters photo prompted reflections on the experience of a lone African American woman who was photographed in a Metro subway car, surrounded by white supremacists.

The planned demonstration of force was timed to bring a fringe group of extremists into public view as the nation marked 250 years of its independence. Indeed, the stunt succeeded in earning the group media coverage across mainstream outlets, amplifying its brand and potential to reach new recruits. On this occasion, the members refrained from engaging in violence and property damage, projecting an image of law-abiding, orderly activism.

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But those who are closely familiar with Patriot Front’s history and operations warn: Don’t believe what you see.

“That is not who they are in private,” said Len Kamdang, director of the Criminal Justice Project at the Lawyers’ Committee for Civil Rights Under Law. “Although they were on their best behavior [last] weekend, this is a dangerous group that commits acts of violence all over the country.”

Patriot Front’s history of violence and property damage

Kamdang’s organization sued members of Patriot Front for vandalizing a public mural dedicated to the tennis legend and Black activist Arthur Ashe in Richmond, Va., in 2021. Ashe, who was inducted into the International Tennis Hall of Fame in 1985, was born in Richmond and his legacy is a continuing source of pride to members of that community.

“A couple of Patriot Front members showed up under cover of night and vandalized the mural,” Kamdang said. “They painted white stencils all over. … They literally tried to whitewash him and they put their symbols of hate all over — their stencils, their slogans. And all the while they were caught on video. And that video leaked using some of the most horrible language that you can imagine.”

In many jurisdictions, law enforcement can seek additional hate crime charges or sentencing enhancements in cases where illegal acts appear to have been motivated by racial bias. But in this case, Kamdang said, Patriot Front members faced no criminal charges and their identities were only revealed when online activists later infiltrated the group and leaked internal records.

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Graham Platner makes it official in Maine, submitting paperwork to leave Senate race

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Graham Platner makes it official in Maine, submitting paperwork to leave Senate race

Now-former Democratic Senate candidate Graham Platner speaks at his primary election night event on June 9 in Blue Hill, Maine. Platner officially dropped out of the race July 10 following rape allegations from a former romantic partner that he denies.

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Graham Platner, Maine’s Democratic nominee for Senate, is officially out of the race.

The Maine Secretary of State said Platner filed the necessary paperwork to withdraw his candidacy two days after he announced he planned to do so following an accusation of rape by a former romantic partner. Platner denies the allegation.

The Maine Democratic Party has until July 27 to pick Platner’s replacement.

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In his withdrawal notice, Platner said “people are desperate for change” and that’s why they voted “for a new kind of politics” by making him the Democratic nominee. He expressed gratitude for those who supported his campaign and said that he will continue to fight for “the movement we have built together and the future we believe in.”

He ended his notice with a strong statement aligned with the progressive platform.

“F*ck ICE. Free Palestine. Up the Hearts.”

Platner announced his plan to withdraw from the race in an 11-minute video he posted to social media on July 8. He said he had no choice but to suspend his campaign, citing it was no longer viable financially.

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“We are going to lose our ability to fundraise. We are going to lose our ability to access voter data. We are going to lose all of the things that any campaign needs on the basic level simply to function,” he said.

Platner added that dropping out was not an admission of guilt. Rather, the decision, he said, is to keep the progressive movement in Maine alive to defeat Republican Sen. Susan Collins in November. Platner blamed the “political establishment” for his downfall and argued the goal was to force him out of the race.

“We built a campaign. We engaged in electoral politics. We motivated people. We banded together. We did it the way that we were told we are supposed to make change and we won. And now they are not going to let us have it. Not if it’s me,” he said.

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Waymo called the cops on teen riders, raising privacy concerns

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Waymo called the cops on teen riders, raising privacy concerns

A Waymo robotaxi drives in San Francisco’s North Beach neighborhood this week.

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Police in San Mateo, Calif., posted Monday on social media that they had apprehended a pair of teenagers from a Waymo driverless robotaxi after the company alerted authorities to suspected criminal activity. It’s the latest incident involving video surveillance of passengers and others by autonomous vehicles — raising questions about the limits of privacy in such vehicles.

The Facebook post by the San Mateo County Police said: “Parents do you know where your teens are? @waymo does!”

The 15-year-olds were allegedly drinking alcohol and shooting toy guns from the car, according to the police. They said Waymo’s systems detected behavior that then triggered a safety response, after which the company disabled the vehicle and contacted police.

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Waymo’s cars, equipped with an array of cameras, microphones and other sensors to monitor passengers and other nearby vehicles, are becoming more common in cities across the United States. Experts say the detention of the two teens in San Mateo highlights a potential — but not inevitable — trade-off between privacy and convenience. It also questions the extent to which companies similar to Waymo are required to hand over private data, including audio and video of passengers, in situations where a crime is suspected.

NPR reached out to Waymo, which is owned by Alphabet, the parent company of Google, for comment on the details of the San Mateo incident and how the company responded, but did not hear back. But on its website, the company says that as many as 29 cameras in its autonomous cars provide an all-around view and “are designed with high dynamic range and thermal stability, to see in both daylight and low-light conditions, and tackle more complex environments.”

“There already exist laws that govern duty to report or even duty to protect” for carriers such as Waymo, according to Alessandro Acquisti, a professor of information technology at the MIT Sloan School of Management. “The privacy problems arise when and if driverless carrier companies used such laws or ethical obligations as a pretext for blanket, indiscriminate accumulation of identifiable data for unspecified future purposes.”

That includes not just monitoring people inside the cars, but outside too. Take, for example, a hit-and-run investigation last year in Los Angeles. Media reported that the police inquiry was aided by video captured by a Waymo taxi that had a clear view of the crime. Critics suggested at the time that authorities were using the company’s vehicles as a mobile surveillance platform. And during 2025 protests in Los Angeles against Immigration and Customs Enforcement crackdowns, demonstrators vandalized Waymos, apparently angry that video recorded by the vehicles could be used by police, although there is no evidence that happened.

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