Anyone trade this spread which seems historically wide at the moment? Caveats? Tips? Benefits over trading KC long/short alone or as an intra-market spread? What’s the margin?
No idea about the spread, but the demand of arabica in the street is higher than the robusta. Arabica is more expensive, more cultivated and with a better taste. I wouldn't bet against it vs the robusta as I don't see a reason for it to appreciate. Inflation and higher cost won't make a difference. Then if the spread you are looking at is wide in favour of the robusta, there might be a trade.
I been shorting coffee recently, hedging nearly impossible as spreads too wide. Starbucks are reducing drinks cause too much time to prepare. So their will be reduction in coffees. LOL, they really can't raise prices, so they make more narrower cups. New CEO, making stores more lean and mean, unless you buy, no free water, ice, restrooms or sitting in store. Darn, no more confrontations with psychotic homeless. Being 6'6" tall and 270lb has some advantages.
Can you trade this spread independently, like short 1.50 somewhere? ICE? CME? Or do I need to buy/sell each one separately?
I dunno. My understanding of Starbuck's new strategy is that they want to reduce the number of complex tooty fruity drinks and coffee drinks that have a lot of add-ins. But they want to compensate for that by reducing their wait times and go back to basic, more affordable cups of Joe and move a ton of that. Not sure that results in a net drop in coffee bean usage if their strategy is successful. If they had their way it would be an increase.