Kingsview CIO Scott Martin On Fox Weather – America’s Weather Center – 3.6.25
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BOB VAN DILLEN: Now to Brazil. The world’s largest coffee producer is dealing with a severe drought, which means people across the globe are going to be paying more for their coffee. Joining us now to explain this and its impacts is the Chief Investment Officer at Kingsview Partners, Scott Martin. Scott, buddy, haven’t seen you in a long time. It’s good to see you, my friend.
SCOTT MARTIN: BVD, it’s been a while. And also, former coffee drinker—I kind of let coffee go last fall, and then coffee prices went nuts. But then it went to eggs, and eggs went nuts too. So we’ll talk about all that and why it’s affecting everybody, from their breakfast table all the way to their daily life.
BOB VAN DILLEN: Yeah. Are we paying more right now? Are we starting to see the signs of it?
SCOTT MARTIN: Yeah, we are. I mean, things have kind of come and gone a little bit. I mean, they’ve ebbed and flowed, like you said, Bob, because of the issues with Brazil, the drought, and things that have been going on, by the way, for quite some time. This isn’t something that just happened in the last few weeks or months—it’s been going on since 2023, as far as some of the underproduction, because the weather hasn’t been great.
One of the issues too, though, with regard to Brazil and some of the other commodity producers, especially in South America, is that we’ve got a couple of trade issues going on with those folks. Also, it’s questionable whether they’ve really insulated the production of a lot of these commodities, Bob, from weather-related factors or even government-related factors. So when you have an issue like a drought, as in the case of coffee prices, as you mentioned, those issues get exacerbated even more. Traders and investors alike start to expect the worst and really push up these prices because things go off the rails a little further when you look at foreign countries producing this stuff.
BOB VAN DILLEN: So it’s like an overreaction going on as well as the drought?
SCOTT MARTIN: Yes, and it always corrects back. The problem is, it gets really bad first. I mean, that’s what happened with eggs—that was probably more bird flu-related. We’ve seen that in the past with things like aluminum, steel, and certainly other commodities, like grains and wheat. But you’re right, it overcorrects because people expect the worst. People think, “This is the time it’s going to go really bad.” Sometimes it does, but it does mean-revert—it does come back to maybe more of a center. But that doesn’t make the pain any less.
BOB VAN DILLEN: No, it doesn’t. And, Scott, I know it’s probably very hard to predict, but how long do you think these high prices are going to last?
SCOTT MARTIN: So, there’s a funny thing in economics, Bob—they say the cure for higher prices is, go figure, higher prices. Because when demand slows down, prices do relent. The trouble is, as far as I can tell, I think people really like their coffee. In fact, I did a quick survey on my way over here, and folks are willing to pay eight, nine, even ten dollars for coffee—up 25 to 30%—because they need their coffee. So something like this may have more of an inelastic demand, meaning price may not have that big of an effect.
So, you could see prices stabilize or stay up here a little longer until the weather improves. But don’t forget, other things—like oil and even gasoline—do pull back when prices get so high because demand eventually relents and returns to a lower level.
BOB VAN DILLEN: God, you talk about other things that could happen. How about the Asian palm civet? If that thing goes on strike—if those cats stop producing their poop—we’re done. The cat poop coffee, the expensive stuff—what happens then?
SCOTT MARTIN: Who would’ve thought the devastation of that would hit so close to home? But your point is well said, though. That mere fear of it happening, Bob, is something that’s going to drive up demand or drive up prices and affect the overall marketplace. So you’re right, there are all these factors out there—some are real, some are exaggerated—and the truth is probably somewhere in the middle. But you just have to go by the prices. And let’s face it, that’s what makes investing fun—the rise up and the fall back down. The real story is somewhere in the middle.
BOB VAN DILLEN: Scott, dude, I wish that cat poop coffee was made up, but it’s not. And elephant poop coffee is a thing as well. I was doing my research, thinking, “What can we drink if we can’t get coffee beans out of Brazil?” I’m not drinking the doo-doo, I’ll tell you that much.
SCOTT MARTIN: It’s making the coffee taste even better right now. Thank you.
BOB VAN DILLEN: Hey man, cheers. Drink up, my friend. It’s good to talk to you, kid, as always. Cheers. Hey, anytime you want to come on a broadcast, man, you’ve got an open invitation. That’s the Chief Investment Officer—
SCOTT MARTIN: I’ll be there tomorrow.
BOB VAN DILLEN: Yeah? All right, cool. Kingsview Partners—that’s Scott Martin. Thanks, buddy, appreciate it.
