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Future price of green beans

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  • Future price of green beans

    This morning The Age in Victoria reports skyrocketing increases in some wholesale green bean prices. Eg 40% increase in Tanzanian and noticeable increases in Brazilian due to drought. Does anyone have a comment on where they believe wholesale green bean prices may be heading in the not too distant future?

  • #2
    On this occasion the report is true enough and greens have already been going upwards and are continuing to do so atleast in the short term...

    That said, please dont take too much notice of what is reported in the regular news media, they dont report everything only snippets when it seen in the not too distant past when they were reporting that green bean prices were down (causing the usual round of bu siness clients wanting to know when their prices were going to be reduced). And the truth was at the time, the prices had been going up so the opposite of what was reported at the time in the regular media.

    Green bean Prices go up and down all the time and dont much reflect on what happens at the brown bean end where the prices of necessity remain reasonably stable over time, and are more affected by the level of stupidity in competition between competing roaster/suppliers...

    Nuff said.


    • #3
      Do you have a link to the article?
      I did a quick search on the Age web site but only found older stories.

      This is an annoying and reoccurring slow news week story that is typically badly researched, misunderstood and then published anyway.

      My search of the Age archives showed that in January they were saying how the price was tumbling down. The media love to run the "coffee is up", "coffee is down" story every other week.

      One article from 6 weeks ago was quoting Ross Quail as saying:
      ''Since January, we've seen about a 65 per cent increase in the seed price. If you're saying to any business that you've seen a 65 per cent price increase in that base level price of your main product, you could expect price rises to follow in the market.''

      I do like Ross but the above is just his business spin to a news reporter, I doubt that in January he would have been saying "the market is at its lowest point in 2 years and we are going to drop our wholesale and retail prices to suit"

      Please also remember that the prices that these stories are based on are generally the International Commodity Exchange or the "New York C" index. This is the price of commodity grade coffee traded on the futures exchange.
      The last two years trading looks like this:

      Click image for larger version

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      The graph scale is US cents per pound farm gate (multiply by 0.0235 to roughly convert to AU$ per kilo and then double to cover transport and clearances to get it here)

      Remember this is for "C" grade coffee, typically not the stuff anyone is bothered to land into Australia and not the sort of grade you will find in BeanBay. Now while the increase in "C" coffee will have a flow-on to Specialty grades it won't be anywhere near as volatile as the commodity market.

      Higher grades of coffee over the last 10 years have had a slow rise in price but not a long way in front of CPI once you take the US/AU dollar fluctuations into account. Over the last 12 months, the commodity price plummeted to lows not seen for years and at the same time so did the Australian dollar... on average, it means about the same for "street price" beans.

      The good news for BeanBay buyers is that we have always sold beans at the landed price, not at the current market price so the 25+ tonnes of coffee we have in stock and on the water at the moment typically provides a good buffer against the natural price fluctuations.

      Of course, longer term drops in the AU$ and higher commodity and/or oil prices will eventually flow through too.

      Moral of the story is... don't take one single piece of market information and apply it as a blanket statement, there are many factors in the determining the real street price.


      • #4
        Aaaaahh nice...........a bit of perspective.

        When you look at the graph the current price is only a couple of cents higher than it was two years ago.

        Hardly cause for a media beat up ............ but as coffee is our favourite beverage, they'll do it any way.


        • #5
          Andy, electronically challenged so have simply copied it below. Cheers

          APRIL 24, 2014 - 1:51 PM ARTICLE 19 OF 24
          Melbourne's coffee prices fastest growing in the country
          BEAU DONELLY

          The cost of a cup of coffee has increased at a faster rate in Melbourne than in any other city, according to a nationwide survey of cafes.

          The audit, by coffee machine company Gilkatho, included low and high-end cafes across the country and found the average price of a caffeine fix in Melbourne increased by almost nine per cent over the past four years.

          And prices are tipped to rise more rapidly as a global shortage of coffee beans threatens to drive up the cost of raw materials.

          The annual survey of more than 1100 cafes shows the average price of a coffee in Australia is $3.54 for a takeaway and $3.59 to dine in. Sydneysiders pay the least for their daily roast ($3.34), while Perth has the most expensive coffee ($3.94).

          Melbourne still boasts cheaper coffee than most cities, with the average cafe charging a palatable $3.43 for a takeaway, up about 30 cents since 2010.

          But a small coffee is increasingly setting customers back more than $4 at some inner-city cafes, and prices are expected to continue their upward trend after a heatwave that ravaged crops in Brazil, the world’s biggest coffee producer, sent coffee prices soaring.

          Anton Greenfield, director of Zest Specialty Coffee Roasters, which supplies about 100 cafes, said he may be forced to pass on increased costs due to the global coffee shortage.

          Mr Greenfield said Tanzanian green beans had skyrocketed 40 per cent since March, increasing from $2.50 to $3.50 a kilo. “It’s a huge increase,” he said. “The drought in Brazil has pushed prices up across the board. We obviously wouldn’t pass the same percentage increase on to customers...but for cafe owners it may equate to 10 cents a cup at most.”

          Mr Greenfield recommends his customers charge between $3.50 and $3.80 for a small coffee.

          Wayne Fowler, managing director of Gilkatho, said research showed Melbourne cafes were charging slightly more for coffee in the last quarter of 2013, but then reduced prices as consumers voted with their feet.

          “We think operators wanted to increase their prices a little bit but found there was some resistance from consumers and they’ve come back to where it was the middle of the year,” he said.

          “It’s within a couple of cents but it’s unusual to see a price go down [between December 2013 and March 2014]. But Melbourne is very competitive.”

          Gilkatho Cappuccino Price Index 2010 - 2014

          Melbourne $3.15 up to $3.43

          Brisbane $3.33 up to $3.61

          Sydney $3.11 up to $3.34

          Perth $3.70 up to $3.94

          Adelaide $3.30 up to $3.47

          Canberra $3.37 up to $3.52


          • #6
            The ridiculously low freight rates in the shipping industry at the moment should offset a rise in bulk commodity prices. Especially for commodities of such a high volume to weight such as coffee. However, ship owners aren't known for their benevolence and will want to be making profits again as soon as possible...... Hate to use a cliche but it's all supply and demand in commodities and ocean transport.

            A smaller, general cargo or containerised shipment of 25t of specialty coffee beans bound for Geelong might not be so lucky with freight rates though......

            Good discussion this one.


            • #7
              shhh im using this as a means to hurry my order past the minister of war and finance and start home roasting